1.         Introduction

The Company today announced that it has conditionally agreed to sell its Data & Analytics Division and its Business Outsourcing Division, being substantially all of the Group's remaining operating divisions, to Apex Consolidation Entity Ltd, being a company within the Apex Group and an affiliate of Genstar Capital Partners LLC (the "Buyer") for an aggregate cash consideration of up to approximately £40 million on a debt free basis (the "Disposal"). Completion of the Disposal is subject to Shareholder approval.  Certain defined terms used in this document are explained in the section headed 'Definitions'.

The Business Outsourcing Division includes multiple regulated entities which will require certain mandatory and suspensory regulatory consents for a change of ownership. The Disposal will therefore be completed in stages to facilitate early completion on the unregulated Data & Analytics Division. The sale of the Data & Analytics Division is expected to complete shortly following Shareholder approval at the General Meeting ("Data & Analytics Sale"), whilst completion and the sale of the Business Outsourcing Division is expected to complete at various times following receipt or waiver of the Regulatory Consent(s) relevant to that part of the Business Outsourcing Division ("Business Outsourcing Sale").

The total consideration shall be apportioned between the Data & Analytics Sale and the Business Outsourcing Sale such that a total of up to approximately £15 million will be allocated to the Data & Analytics Division (the "Data & Analytics Consideration") and a total of up to approximately £25 million to the Business Outsourcing Division payable in tranches on the completion of the constituent parts of the Business Outsourcing Sale (the "Business Outsourcing Consideration") as follows: £13 million for the Irish business; £4 million for the Luxembourg business; £4 million for the Guernsey business; and £4 million for the Jersey business.

The majority of the consideration will be applied to reducing the debt owed to the Senior Lender.  While there are a number of potential outcomes, it should be noted that it is highly unlikely that there will be a substantial, or any, amount available to Shareholders following payment of all creditors and costs.

Upon final completion of the Business Outsourcing Sale following receipt (or waiver) of all the Regulatory Consents, the Company will be regarded as an AIM Rule 15 cash shell, having ceased to own, control or conduct all or substantially all, of its existing trading business, activities or assets. The Disposal is therefore conditional on the consent of Shareholders at the General Meeting and certain other conditions.

In addition, as part of the reorganisation of the Group, the Company intends to give notice to the SRA of the proposed closure of its legal business and certain further steps may need to be considered in relation to the remaining group structure in order to optimise any return to the Group stakeholders.

The Company is seeking Shareholders' approval to cancel the admission of its Ordinary Shares to trading on AIM. In accordance with Rule 41 of the AIM Rules, the Company has notied the London Stock Exchange of the proposed Cancellation. Assuming the passing of Resolutions 1 and 2, it is expected that Cancellation will occur in 12 May 2023.

Shareholders should note that, in the event that Resolution 1 is not passed, no part of the Disposal will occur and the Company will not have sufficient certainty of funds to continue as a going concern.  In such situation, it is the view of the Board that there is a significant risk that the Company's creditors would take action to put the whole or part of the Group into an insolvency process, as the Board does not believe that there is any alternative funding available or purchaser for the assets on equal or better terms.

The purpose of this document is to provide you with information on the background to, and reasons for, the Disposal, the proposed Cancellation and the proposed amendments to the Existing Articles, to explain why the Directors consider the Disposal, the proposed Cancellation and the proposed amendments to the Existing Articles to be in the best interests of the Company and Shareholders and why the Directors recommend that Shareholders vote in favour of all the Resolutions to be proposed at the General Meeting, as the Directors intend to do in respect of their own beneficial holdings of, in aggregate, 6,076,508 Ordinary Shares, representing approximately 2.99 per cent. of the Company's existing issued ordinary share capital.

The Company has received irrevocable undertakings to vote, or procure a vote in favour of Resolution 1 from certain institutional and other Shareholders in respect of, in aggregate, 60,715,557 Ordinary Shares representing approximately 29.85 per cent. of the Company's existing issued ordinary share capital.

The Company has also received letters of intent to vote, or procure a vote, in favour of Resolution 1 from certain institutional and other Shareholders in respect of, in aggregate, 31,348,356 Ordinary Shares representing approximately 15.41 per cent. of the Company's existing issued ordinary share capital.

2.         Background to, and reasons for, the Disposal

Introduction

On 17 October 2022, the Company announced that it had been in discussions with its auditors in relation to the treatment of revenue recognition on one major contract and certain costs included in Adjusted EBITDA and that, as a consequence, it was unlikely to be in a position to meet prior guidance.  The Company later announced on 12 December 2022 that the Board had become aware of additional issues, including in relation to the reporting of historical trading of the business in relation to FY 2022, the full impact of which remains unclear. The Group applied to suspend trading of the Ordinary Shares on AIM, pending clarification.  The Board confirmed that it had appointed an external accounting and financial services firm to assist it.

On 16 January 2023, the Board confirmed that it had received inbound indications of interest for certain divisions of the business and had engaged restructuring and M&A advisers to look at a potential sale of one or a number of its business lines.  At this point, the Board was looking at reducing costs, strengthening the balance sheet and working closely with its key stakeholders.

On 13 February 2023, the Group announced the resignation of its external auditors and two days later it announced the resignation of its founder and CEO Matthew Hudson.

The Group's restructuring and M&A advisers, Alvarez & Marsal Europe LLP, assisted in undertaking an accelerated M&A process to seek to protect the value in the business and they identified and contacted a number of potential purchasers for some or all of the Company's business units, which resulted in a high level of initial interest.  The requirement for speed ruled out a number of bidders who had initially expressed interest.

On 10 March 2023, the Group exchanged on the sale of its UK Fund Management Business for £1.0 million in cash plus £15,000 each month for three months following exchange and £30,000 each month thereafter until completion, to be paid on completion.  On completion, the inter-company loans between the Group and the UK Fund Management Business entities will be reorganised and extinguished.  Completion will take place once regulatory approval from the Financial Conduct Authority is received.

Disposal of the Data & Analytics and Business Services Divisions and AIM Rule 15

The Company today announced that it has entered into a binding conditional sale and purchase agreement for substantially all of the subsidiaries and assets of the Group to the Buyer for a maximum aggregate cash consideration of up to approximately £40 million on a debt free basis.

The Data & Analytics Sale is conditional upon the Reorganisation Condition being effected and upon Shareholder approval of Resolution 1 at the General Meeting. Completion of the Data & Analytics Sale is therefore expected to occur five Business Days following the passing of Resolution 1 at the General Meeting. Upon Completion of the Data & Analytics Sale, the Buyer will pay £12 million and will retain £3 million as part of the Holdback Amount.

The Business Outsourcing Sale is split into four separate parcels of corporate entities, being the Guernsey parcel, the Jersey parcel, the Irish parcel and the Luxembourg parcel. The sale of each of these parcels within the Business Outsourcing Sale is conditional upon the same Shareholder approval condition as the Data & Analytics Sale. In addition, the sale of each of the parcels is also subject to obtaining the Regulatory Consents relevant to that parcel. Upon Completion of the sale of a parcel, the Buyer will pay the consideration apportioned to that parcel (being £13 million for the Irish parcel; £4 million for the Luxembourg parcel; £4 million for the Guernsey parcel; and £4 million for the Jersey parcel) less a deduction equal to 18% of the consideration payable for the parcels within the Business Outsourcing Sale, which will be applied towards the Holdback Amount.

While the Board is confident that all of the appropriate Regulatory Consents will be granted, there can be no guarantee that this is the case.

The assets being sold as part of the Disposal are the following:

Data & Analytics: ESG consulting, Custodian Bank Benchmarking, IR & Marketing, Investment Advisory and Quantitative Solutions.  The operating profit attributable to the Data & Analytics assets being sold for the audited year ended 30 June 2021 was approximately £1.5m and operating profit for the unaudited year ended 30 June 2022 was approximately £2.6m. The value of the Data & Analytics Business on the Group's balance sheet, as at June 2021, was approximately £(0.1) million. 

Business Outsourcing: the Irish and Luxembourg ManCo businesses and the Channel Islands based Fund Administration and Fiduciary businesses. The operating profit attributable to the Business Outsourcing assets being sold for the audited year ended 30 June 2021 was approximately £1.5m and operating profit for the unaudited year ended 30 June 2022 was approximately £3.1m. The value of the Business Outsourcing Business on the Group's balance sheet, as at June 2021, was approximately £3.7 million.

Use of proceeds of the sale

The consideration payable pursuant to the Disposal is up to approximately £40 million on a debt free basis. Of this the Data & Analytics Consideration of up to approximately £15 million is expected to be payable in early May 2023, with the Business Outsourcing Consideration of up to approximately £25 million payable in tranches following the receipt of the relevant Regulatory Consent(s) referred to above. The consideration payable is subject to deductions from the Holdback Amount. One of the Sellers will enter into a transitional services agreement which will deal with the provision of certain services on a transitional basis to the various businesses following their sale. The employment of certain employees (including some of the Directors) of the Sellers will transfer to the Buyer.

As at 31 March 2023, the Group owed approximately £33.7 million under its facilities and overdrafts and it is expected that further funding will be required to the point of completion of the sale of the Business Outsourcing Division.  The majority of the Consideration will therefore be applied to reducing Remaining Group's debt. While there are a number of potential outcomes, given the level of creditors of the business expected at the point of final completion of the Business Outsourcing Sale, it should be noted that it is unlikely that there will be a substantial amount available to Shareholders following payment of all creditors and costs, if any.

In accordance with AIM Rule 15, the Disposal constitutes a fundamental change of business of the Company. The Disposal is therefore conditional on the approval of Shareholders at the General Meeting.

On completion of the Disposal, the Company will cease to own, control or conduct all or substantially all of its existing trading business, activities or assets. The Company will therefore become an AIM Rule 15 cash shell. As there is no intention by the Directors to make an acquisition or acquisitions which constitute a reverse takeover under AIM Rule 14 (including seeking re-admission as an investing company (as defined under the AIM Rules)) on or before the date falling six months from completion of the Business Outsourcing Sale or be re-admitted to trading on AIM as an investing company under the AIM Rules (which requires the raising of at least £6 million), the Directors are seeking Shareholder approval for Cancellation, as detailed below.

3.         Background to, and reasons for, the proposed Cancellation

In light of the conditional agreement entered into today to effect the Disposal, the Board expects that following completion of the Data & Analytics Sale and, in due course subject to Regulatory Approval, the Business Outsourcing Sale, the Company will become an AIM Rule 15 cash shell with no trading business.  Furthermore, as noted above, it is expected that obtaining all the Regulatory Consents will take a number of months.  During this period, the Company is not likely to be able to make suitable use of being admitted to AIM as it is expected that the Ordinary Shares will remain suspended due to it being unlikely to be in a position to publish its FY 2022 audited accounts. Under the AIM Rules, if the Company remains suspended for six months following its suspension on 12 December 2022, the admission of its shares to AIM will be cancelled in any event.

The Directors believe It is therefore in the best interests of the Company and its Shareholders to seek Shareholders' approval to cancel the admission of the Ordinary Shares to trading on AIM. In accordance with Rule 41 of the AIM Rules, the Company has notied the London Stock Exchange of the proposed Cancellation. Assuming the passing of Resolutions 1 and 2 and completion of the Data & Analytics Sale, it is expected that Cancellation will occur on or around 12 May 2023.

Pursuant to Rule 41 of the AIM Rules, Resolution 2 (relating to the Cancellation) requires the approval of not less than 75 per cent. of the votes cast by Shareholders (whether present in person or by proxy) at the General Meeting. Resolution 2 is conditional upon: (i) Resolution 1 being approved; and (ii) the completion of the Data & Analytics Sale.

The Directors have conducted a review of the benets and disadvantages to the Company and its Shareholders in retaining its admission to trading on AIM. The Directors believe that the Cancellation is in the best interests of the Company and its Shareholders as a whole. Following the Disposal, the Company will have no trading business and limited cash resources. Maintaining the Company's admission to trading on AIM requires signicant management time, legal and regulatory obligations, and comes with material nancial costs (such as professional fees, London Stock Exchange fees and other costs associated with being an AIM-traded company) that the Directors believe are disproportionate to the benets to the Company.

4.         Process for, and principal effects of, the Cancellation

Under the AIM Rules, the Company is required to give at least 20 clear Business Days' notice of the Cancellation. Pursuant to Rule 41 of the AIM Rules, the Cancellation is also conditional upon the approval of not less than 75 per cent. of the votes cast by Shareholders (whether present in person or by proxy) at the General Meeting. The Notice of General Meeting contains Resolution 2 which proposes that admission to trading of the Ordinary Shares on AIM be cancelled. Additionally, Cancellation will not take effect until at least five clear Business Days have passed following the passing of Resolution 2 (and only if the Data & Analytics Sale completes). 

Assuming the passing of Resolutions 1 and 2 and completion of the Data & Analytics Sale, it is expected that Cancellation will occur on or around 12 May 2023. Shareholders should note that Cancellation will not take place if Resolutions 1 and 2 are not both duly passed at the General Meeting. Resolution 2 is conditional upon: (i) Resolution 1 being duly approved; and (ii) the completion of the Data & Analytics Sale.

Following Cancellation and up to the eventual liquidation the Company may seek to implement a matched bargain facility so that there will be a market for Shareholders to effect transactions in the Ordinary Shares following Cancellation.  However, no matched bargain facility is currently in place and there can be no certainty that a matched bargain facility will be put in place or that, if it is, it will remain for any extended period following Cancellation.

The principal effects of the Cancellation will be that:

·           there will be no public market on any recognised investment exchange or multilateral trading facility for the Ordinary Shares and, consequently, there can be no guarantee that a Shareholder will be able to purchase or sell any Ordinary Shares;

·           while the Ordinary Shares will remain freely transferable, it is likely that the liquidity and marketability of the Ordinary Shares will, in the future, be more constrained than at present and the secondary market value of such Ordinary Shares may be adversely affected as a consequence;

·           in the absence of a formal market and quote, it may be more difficult for Shareholders to determine the market value of their investment in the Company at any given time;

·           the regulatory and financial reporting regime applicable to companies whose shares are admitted to trading on AIM will no longer apply;

·           the levels of disclosure and corporate governance within the Group may not be as stringent as those for a Company quoted on AIM; however the Company will continue to be subject to the City Code for a period of at least ten years from the date of Cancellation;

·           Shareholders will no longer be afforded the protections given by the AIM Rules, such as the requirement to be notified of certain events and the requirement that the Company seek Shareholder approval for certain corporate actions, where applicable, including substantial transactions, financing transactions, reverse takeovers, related party transactions and fundamental changes in the Company's business, including certain acquisitions and disposals;

·           in order to increase the cost saving by becoming a private company, following the Cancellation, the Company will no longer be obligated to produce and publish half-yearly reports and related financial statements;

·           the Company will cease to have a nominated adviser and broker;

·           whilst the Company's CREST facility will remain in place following the Cancellation, the Company's CREST facility may be cancelled in the future and, in that event, although the Ordinary Shares will remain transferable, they will cease to be transferable through CREST.  In this instance, Shareholders who hold Ordinary Shares in CREST will receive share certificates; and

·           the Cancellation may have taxation consequences for Shareholders.  Shareholders who are in any doubt about their tax position should consult their own professional independent tax adviser.

Shareholders should be aware that if the Cancellation takes effect, they will at that time cease to hold shares in a quoted company and will become Shareholders in an unquoted company which will be likely significantly to reduce the marketability and liquidity of the Ordinary Shares and the principal effects referred to above will automatically apply to the Company from the date of the Cancellation.

The above considerations are not exhaustive, and Shareholders should seek their own independent advice when assessing the likely impact of the Cancellation on them.

5.         General Meeting

Set out at the end of this document is the notice of the General Meeting to be held at Forum 4, Grenville Street, St. Helier, Jersey JE4 8TQ, Channel Islands at 2 p.m. on 3 May 2023 at which the following Resolutions will be proposed:

·           Resolution 1 (to approve the Disposal)

·           Resolution 2 (to approve the proposed Cancellation)

·           Resolution 3 (to approve certain amendments to the Existing Articles)

Resolution 1 is being proposed as an ordinary resolution and will require approval by more than 50 per cent. of those votes cast (by persons present in person or by proxy) at the General Meeting.  Resolution 2 is being proposed as a 'shareholder consent' resolution and, in accordance with the requirements of Rule 41 of the AIM Rules for Companies and article 52.2 of the Company's articles of association, will require approval by at least 75 per cent. of those votes cast (by persons present in person or by proxy) at the General Meeting.  Resolution 3 is being proposed as a special resolution and will require approval by at least two thirds of those votes cast (by persons present in person or by proxy) at the General Meeting.

Completion of the Disposal (and any part of it) is conditional, inter alia, on Shareholders passing Resolution 1. If Shareholders do not pass Resolution 1, completion of the Disposal (or any part of it) will not proceed.

Completion of the Cancellation is conditional, inter alia, on Shareholders passing Resolution 1 and Resolution 2. If Shareholders do not pass both Resolution 1 and Resolution 2, the Cancellation will not proceed.

Amending the Existing Articles is conditional only on passing Resolution 3 and, if that Resolution is passed, the proposed amendments will become effective immediately.  A summary of the proposed principal changes to the Existing Articles is set out in Part III of this document and a document showing these changes (and all other proposed changes) and a clean copy of the Amended Articles will be available at: www.mjhudson.com/investors/shareholder-information/ until the conclusion of the General Meeting.

6.         Action to be taken

The Resolutions are set out in the Notice of General Meeting at the end of this document.

Shareholders can submit their vote electronically using the link www.signalshares.com. Shareholders can use this service to vote or appoint a proxy electronically by logging into their Signal shares account, or register if they have not previously done so, by no later than 2.00 p.m. on 2 May 2023 (or, in the case of an adjournment of the General Meeting, not less than 24 hours before the time fixed for the holding of the adjourned General Meeting (at the discretion of the Directors, excluding any part of a day that is not a Business Day)).

Shareholders who have elected to vote by post will have received a hard copy Form of Proxy for the General Meeting with this document.

If you hold your Ordinary Shares in uncertificated form (that is, in CREST) you may vote using the CREST proxy voting service in accordance with the procedures set out in the CREST manual (please also refer to the accompanying notes to the Notice of the General Meeting set out at the end of this document). Proxies submitted via CREST must be received by the Company's agent (ID: RA10) by no later than 2 p.m. on 2 May 2023 (or, in the case of an adjournment of the General Meeting, not less than 24 hours before the time fixed for the holding of the adjourned General Meeting (at the discretion of the Directors, excluding any part of a day that is not a Business Day)).

Appointing a proxy in accordance with the instructions set out above will enable your vote to be counted at the General Meeting in the event of your absence. Completing a Form of Proxy, voting electronically or using the CREST proxy voting service will not prevent you from attending, speaking and voting at the General Meeting, or any adjournment of it, in person should a Shareholder wish to do so.

If Shareholders need help with voting, they should contact the Company's Registrar, Link Group, on tel: 0371 664 0391. Calls are charged at the standard geographic rate and will vary by provider. Calls outside the United Kingdom will be charged at the applicable international rate. Lines are open between 9.00 a.m. to 5.30 p.m., Monday to Friday (excluding public holidays in England and Wales), or by email at shareholderenquiries@linkgroup.co.uk.

7.         Recommendation

The Board believes that the Resolutions, Disposal, Cancellation and amendments to the Existing Articles are in the best interests of the Company and the Shareholders as a whole.

Accordingly, the Board unanimously recommends that Shareholders vote in favour of the Resolutions to be proposed at the General Meeting, as all of the Directors holding Ordinary Shares intend to do in respect of their own beneficial holdings of, in aggregate, 6,076,508 Ordinary Shares representing approximately 2.99 per cent. of the Company's existing issued ordinary share capital.

The Company has received irrevocable undertakings and letters of intent to vote, or procure a vote, in favour of Resolution 1 in respect of, in aggregate, 92,063,913 Ordinary Shares representing approximately 45.27 per cent. of the Company's existing issued ordinary share capital. 

PART II

SUMMARY OF KEY TERMS AND CONDITIONS OF THE SPA

The SPA is made between the Sellers and the Buyer and relates to the Data & Analytics Sale and the Business Outsourcing Sale.

The Data & Analytics Sale is conditional upon the Reorganisation Condition being effected and upon Shareholder approval of Resolution 1 at the General Meeting. Completion of the Data & Analytics Sale is therefore expected to occur five Business Days following the passing of Resolution 1 at the General Meeting. Upon Completion of the Data & Analytics Sale, the Buyer will pay £12 million and will retain £3 million as part of the Holdback Amount (approximately).

The Business Outsourcing Sale is split into four separate parcels of corporate entities, being the Guernsey parcel, the Jersey parcel, the Irish parcel and the Luxembourg parcel. The sale of each of these parcels within the Business Outsourcing Sale is conditional upon Shareholder approval of Resolution 1 at the General Meeting. In addition, the sale of each of the parcels is also subject to obtaining the Regulatory Consents relevant to that parcel and the relevant regulator not imposing adverse conditions as such Regulatory Consents. Upon Completion of the sale of a parcel, the Buyer will pay the consideration apportioned to that parcel (being £13 million for the Irish parcel; £4 million for the Luxembourg parcel; £4 million for the Guernsey parcel; and £4 million for the Jersey parcel) less a deduction equal to 18% of the consideration payable which will be applied towards the Holdback Amount (approximate numbers).

If the relevant Regulatory Consents for the sale of a parcel are not received by 31 December 2023, the sale of that parcel will lapse. The Buyer has a right to terminate the SPA in so far as it relates to any parcel if any of the companies contained within that parcel is the subject of an insolvency event during the period from the date of the SPA until completion of the sale of that parcel (the "Interim Period").

During the Interim Period the Sellers are obliged to use funding available to them to continue to operate and provide services to the companies which are the subject of the SPA. There are the usual positive and negative obligations placed upon the Sellers for the duration of the Interim Period in relation to the target companies.

The Sellers are providing fundamental, commercial and tax warranties to the Buyer, together with specific indemnities in relation to certain known risk items and in relation to the provision of services under the transitional services agreement. The Sellers' liability under the SPA is limited to the Holdback Amount and is subject to other usual Sellers' liability protections.

The Holdback Amount is to be available to the Buyer to meet claims under the warranties, tax covenant and indemnities. The Holdback Amount (less the sum of any agreed or not yet determined claims) will be payable to the Sellers on 30 September 2024 and any sums relating to claims not determined at that point will continue to be held back until such claims can be determined.

PART III

SUMMARY OF THE PROPOSED PRINCIPAL CHANGES TO THE EXISTING ARTICLES

The following are the proposed procedural amendments to the articles of association of the Company, to reduce the time required to hold EGMs:

•             to remove the requirement for 72 hours' notice to hold Board meetings pursuant to Article 124 (subject to notice having been given to the Directors) given this period was felt to be impractical by the Directors;

•             to reduce the period by which notices of EGMs / AGMs are deemed to be served pursuant to Article 162. The amendment proposes that notice will be deemed served on the day following posting of the relevant circular, as opposed to on the fifth day following posting, which the Board considered unnecessarily extended the time it took for the Company to call such meetings. Following the amendment, such meetings shall be capable of being held in the more usual period of 14 clear days' notice from the date of notice; and

•             to remove the defined term "Holder" given this term is not used in the articles of association and so which is a tidying amendment.

A document showing these changes (and all other proposed changes) and a clean copy of the Amended Articles is available at: www.mjhudson.com/investors/shareholder-information/ until the conclusion of the General Meeting.

DEFINITIONS

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