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Highams Systems Services Group PLC

Highams Systems Services Group PLC

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

&middot Acquisition of Nakama for a consideration of &pound1.28 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")

&middot The merger will provide Highams with scale and a broadening of sector and geographical reach

&middot Key strategic objectives achieved both of reopening a London office and expanding internationally

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

&middot 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

&middot 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

&middot 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 tobroaden 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 directionmakes him eminently qualified to drive the enlarged group forward and I very much look forward to our joint future success."

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 Nakamaby 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 &pound1.28 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 &pound233,573 on revenue of &pound4,701,339. Net assets were &pound72,299 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 &pound160,933 on revenue of &pound2,990,385. 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 &pound102,000 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 &pound645,000 in 2003 to over &pound7 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:

Name

No. of Consideration Shares and total shareholding on Admission

Percentage of Enlarged Share Capital held on Admission

Stefan Ciecierski

13,006,137

11.04%

Paul Goodship

13,006,137

11.04%

Robert Sheffield

13,006,137

11.04%

David Whitaker

3,657,977*

3.11%

Sondra Beram

3,657,977

3.11%

Julia Stojko

2,438,651

2.07%

Total

48,773,016

41.41%

*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.

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