RECOMMENDED CASH OFFER FOR Servelec Group plc by Scarlet Bidco Limited

Transcription

1 THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. PART TWO OF THIS DOCUMENT COMPRISES AN EXPLANATORY STATEMENT IN COMPLIANCE WITH SECTION 897 OF THE COMPANIES ACT AND DETAILS OF A PROPOSAL WHICH, IF IMPLEMENTED, WILL RESULT IN THE CANCELLATION OF THE LISTING ON THE OFFICIAL LIST AND OF ADMISSION TO TRADING OF SERVELEC SHARES ON THE LONDON STOCK EXCHANGE S MAIN MARKET FOR LISTED SECURITIES. If you are in any doubt as to the action you should take, you are recommended to seek your own financial advice immediately from your stockbroker, bank manager, accountant or other independent financial adviser authorised under the Financial Services and Markets Act 2000 if you are in the United Kingdom, or from another appropriately authorised independent financial adviser if you are taking advice in a territory outside the United Kingdom. If you have sold or otherwise transferred all of your Servelec Shares, please send this document (but not any personalised accompanying documents) and any reply-paid envelope at once to the purchaser or transferee, or to the stockbroker, bank or other agent through whom the sale or transfer was effected, for transmission to the purchaser or transferee. However, such documents should not be forwarded or transmitted in, into or from any jurisdiction where to do so would constitute a violation of the relevant laws of such jurisdiction. If you have sold or otherwise transferred part only of your holding of Servelec Shares, please retain these documents and consult the stockbroker, bank or other agent through whom the sale or transfer was effected. If you have recently purchased or otherwise been transferred Servelec Shares in certificated form, notwithstanding receipt of this document and any accompanying documents from the transferor, you should contact Link Asset Services at 34 Beckenham Road, Beckenham, Kent, BR3 4TU or on the telephone numbers set out on page 2 of this document to obtain personalised Forms of Proxy. The distribution of this document in or into jurisdictions other than the United Kingdom may be restricted by the laws of those jurisdictions and therefore persons into whose possession this document comes should inform themselves about and observe, any such restrictions. Failure to comply with any such restrictions may constitute a violation of the securities laws of any such jurisdiction. Neither this document nor any of the accompanying documents are intended to, and do not, constitute or form part of any offer or invitation to purchase, otherwise acquire, subscribe for, sell or otherwise dispose of, any securities or the solicitation of any vote or approval pursuant to the Scheme or otherwise, in any jurisdiction in which such offer, invitation or solicitation is unlawful. RECOMMENDED CASH OFFER FOR Servelec Group plc by Scarlet Bidco Limited (a newly formed company indirectly held by the Montagu Funds) to be effected by means of a scheme of arrangement under Part 26 of the Companies Act 2006 This document, together with the accompanying Forms of Proxy, should be read as a whole. Your attention is drawn to the letter from the Chairman of Servelec in Part One of this document, which contains the unanimous recommendation of the Servelec Directors that you vote in favour of the Scheme at the Court Meeting and the special resolution to be proposed at the General Meeting. A letter from Investec explaining the Scheme appears in Part Two of this document and constitutes an explanatory statement in compliance with section 897 of the Companies Act. Notices of the Court Meeting and the General Meeting of Servelec Group plc, each of which will be held at the offices of Investec Bank plc at 2 Gresham Street, London, EC2V 7QP, United Kingdom on 22 December 2017, are set out on pages 66 to 71 of this document. The Court Meeting will start at

2 10.00 a.m. on that date and the General Meeting at a.m. or as soon thereafter as the Court Meeting is concluded or adjourned. Action to be taken by Servelec Shareholders is set out on page 18 of this document. Servelec Shareholders are asked to complete and return the enclosed blue and yellow Forms of Proxy in accordance with the instructions printed on them as soon as possible, but in any event so as to be received by Servelec s registrars, Link Asset Services, not later than in respect of the blue Form of Proxy, a.m. on 20 December 2017 or, in respect of the yellow Form of Proxy a.m. on 20 December Servelec Shareholders who hold Servelec Shares in CREST may also appoint a proxy through the CREST electronic proxy appointment service by following the instructions set out on pages 7 to 8 of this document. If the blue Form of Proxy for the Court Meeting is not returned by the relevant time, it may be handed to Servelec s registrar, Link Asset Services, on behalf of the Chairman of the Court Meeting, before the start of the Court Meeting. However, in the case of the General Meeting, if the yellow Form of Proxy is not returned by the relevant time, it will be invalid. If you have any questions about this document, the Court Meeting or the General Meeting, or how to complete the Forms of Proxy, please contact Link Asset Services at 34 Beckenham Road, Beckenham, Kent, BR3 4TU or on or if calling from outside the UK on +44 (0) 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. Link Asset Services is open between 9.00 a.m. to 5.30 p.m., Monday to Friday excluding public holidays in England and Wales. Please note that Link Asset Services cannot provide any financial, legal or tax advice and calls may be recorded and monitored for security and training purposes. Raymond James Financial International Limited is authorised and regulated by the Financial Conduct Authority. Raymond James is acting exclusively as financial adviser to Scarlet Bidco and Montagu and no one else in connection with the Offer and will not be responsible to anyone other than Scarlet Bidco for providing the protections afforded to clients of Raymond James nor for providing advice in connection with the Offer or any matter referred to in this document. Investec Bank plc is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority in the UK. Investec is acting exclusively for Servelec and no one else in connection with the Offer and will not be responsible to anyone other than Servelec for providing the protections afforded to clients of Investec nor for providing advice in connection with the Offer or any matter referred to in this document. 2

3 IMPORTANT NOTICE Overseas Shareholders The release, publication or distribution of this document in certain jurisdictions may be restricted by law. Persons who are not resident in the United Kingdom or who are subject to other jurisdictions should inform themselves of and observe, any applicable requirements. Neither this document nor any of the accompanying documents are intended to and do not, constitute or form part of any offer or invitation to purchase, otherwise acquire, subscribe for, sell or otherwise dispose of, any securities or the solicitation of any vote or approval pursuant to the Scheme or otherwise, in any jurisdiction in which such offer, invitation or solicitation is unlawful. This document has been prepared for the purposes of complying with English law, the Takeover Code and the Listing Rules and the information disclosed may not be the same as that which would have been disclosed if this document had been prepared in accordance with the laws of jurisdictions outside of England. Unless otherwise determined by Scarlet Bidco or required by the Takeover Code and permitted by applicable law and regulation, the Offer will not be made available, directly or indirectly, in, into or from a Restricted Jurisdiction where to do so would violate the laws in that jurisdiction and no person may vote in favour of the Offer by any means, instrumentality or form within a Restricted Jurisdiction or any other jurisdiction if to do so would constitute a violation of the laws of that jurisdiction. Accordingly, copies of this document and all documents relating to the Offer are not being and must not be, directly or indirectly, mailed or otherwise forwarded, distributed or sent in, into or from a Restricted Jurisdiction where to do so would violate the laws of that jurisdiction and persons receiving this document and all documents relating to the Offer (including custodians, nominees and trustees) must not mail or otherwise distribute or send them in, into or from such jurisdictions where to do so would violate the laws of that jurisdiction. The availability of the Offer to Servelec Shareholders who are not resident in the United Kingdom may be affected by the laws of the relevant jurisdiction in which they are resident. Persons who are not resident in the United Kingdom should inform themselves of and observe, any applicable requirements. Any failure to comply with the applicable restrictions may constitute a violation of the securities laws of any such jurisdiction. To the fullest extent permitted by applicable law, the companies and persons involved in the Offer disclaim any responsibility or liability for the violation of such restrictions by any person. The Offer will be subject to the applicable requirements of the Takeover Code, the Panel, the London Stock Exchange, the Financial Conduct Authority and the UKLA. Notice to US Shareholders The Offer relates to shares of an English incorporated and registered company and is proposed to be effected by means of a scheme of arrangement under English law. A transaction effected by means of a scheme of arrangement is not subject to proxy solicitation or tender offer rules under the US Securities Exchange Act of 1934 (the US Exchange Act ). Accordingly, the Offer is subject to the disclosure requirements, rules and practices applicable in the United Kingdom to schemes of arrangement, which differ from the requirements of US proxy solicitation or tender offer rules. However, if Scarlet Bidco were to elect to implement the Offer by means of a takeover offer, such takeover offer will be made in compliance with all applicable US laws and regulations. Such a takeover would be made in the United States by Scarlet Bidco and no one else. In accordance with normal UK practice and pursuant to Rule 14e-5(b) of the US Exchange Act, Scarlet Bidco, certain affiliated companies and their respective nominees or brokers (acting as agents) may make certain purchases of, or arrangements to purchase, Servelec Shares, other than pursuant to the Offer, until the date on which the Offer and/or Scheme becomes effective, lapses or is otherwise withdrawn. If such purchases or arrangements to purchase were to be made they would be made outside the United States and would comply with applicable law, including the US Exchange Act. The information contained in this document has neither been approved or disapproved by the US Securities and Exchange Commission (the SEC ) or any US state securities commission. Neither the SEC, nor any state securities commission, has passed upon or determined the fairness or merits of 3

4 the proposal described in, nor upon the accuracy or adequacy of the information contained in, this document. The financial information included in this document has been prepared in accordance with accounting standards applicable in the United Kingdom that may not be comparable to the financial statements of US companies. US generally accepted accounting principles differ in certain respects from IFRS used in the United Kingdom. None of the financial information in this document has been audited in accordance with auditing standards generally accepted in the United States or the auditing standards of the Public Accounting Oversights Board (United States). The receipt of cash pursuant to the Offer by a US Shareholder as consideration pursuant to the terms of the Offer may be a taxable transaction for US federal income tax purposes and under applicable US state and local, as well as foreign and other, tax laws. Each US Shareholder is urged to consult his independent professional adviser immediately regarding the tax consequences of the Offer applicable to him or her. It may be difficult for US Shareholders to enforce their rights and claims arising out of the US federal securities laws, since Scarlet Bidco and Servelec are located in countries other than the US and some or all of their officers and directors may be residents of countries other than the US. US Shareholders may not be able to sue a non-us company or its officers or directors in a non-us court for violations of US securities laws. Further, it may be difficult to compel a non-us company and its affiliates to subject themselves to a US court s judgement. Statements The statements contained in this document are made as at the date of this document, unless some other time is specified in relation to them and service of this document will not give rise to any implication that there has been no change in the facts set forth in this document since such date. Nothing in this document will be deemed to be a forecast, projection or estimate of the future financial performance of Servelec, the Servelec Group, Scarlet Bidco or the Scarlet Bidco Group except where otherwise stated. Forward-looking statements This document contains statements about Scarlet Bidco and Servelec that are or may be forwardlooking statements. All statements other than statements of historical facts included in this document may be forward-looking statements. Without limitation, any statements preceded or followed by or that include the words targets, plans, believes, expects, aims, intends, will, shall, may, anticipates, estimates, projects or words or terms of similar substance or the negative thereof, are forward-looking statements. Forward-looking statements include statements relating to the following: (i) future capital expenditures, expenses, revenues, earnings, synergies, economic performance, indebtedness, financial condition, dividend policy, losses and future prospects; (ii) business and management strategies and the expansion and growth of Scarlet Bidco s or Servelec s operations and potential synergies resulting from the Offer; and (iii) the effects of government regulation on Scarlet Bidco s or Servelec s business. Such forward-looking statements involve risks and uncertainties that could significantly affect expected results and are based on certain key assumptions. Many factors could cause actual results to differ materially from those projected or implied in any forward-looking statements. Due to such uncertainties and risks, readers are cautioned not to place undue reliance on such forward-looking statements, which speak only as of the date hereof. Other than in accordance with their legal or regulatory obligations (including, to the extent applicable, under the Listing Rules and the Disclosure Guidance and Transparency Rules, each of the Financial Conduct Authority), Scarlet Bidco and Servelec each disclaim any obligation to update any forward-looking or other statements contained in this document whether as a result of new information, future events or otherwise. No profit forecasts or estimates No statement in this document is intended as a profit forecast or estimate for any period and no statement in this document should be interpreted to mean that earnings or earnings per share for Servelec for the current or future financial years would necessarily match or exceed the historical published earnings or earnings per share for Servelec. 4

5 Disclosure requirements of the Takeover Code Under Rule 8.3(a) of the Takeover Code, any person who is interested in one per cent. 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 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 3.30 p.m. (London time) on the 10th business day following the commencement of the offer period and, if appropriate, by no later than 3.30 p.m. (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. Under Rule 8.3(b) of the Takeover Code, any person who is, or becomes, interested in 1 per cent. 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 3.30 p.m. (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 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) if you are in any doubt as to whether you are required to make an Opening Position Disclosure or a Dealing Disclosure. Electronic communications Please be aware that addresses, electronic addresses and certain information provided by Servelec Shareholders, persons with information rights and other relevant persons for the receipt of communications from Servelec may be provided to Scarlet Bidco during the Offer Period if requested under Section 4 of Appendix 4 of the Takeover Code to comply with Rule 2.11(c) of the Takeover Code. Rounding Certain figures included in this document have been subjected to rounding adjustments. Accordingly, figures shown for the same category presented in different tables may vary slightly and figures shown as totals in certain tables may not be an arithmetic aggregation of the figures that precede them. Publication on website and availability of hard copies A copy of this document will be made available subject to certain restrictions relating to persons resident in Restricted Jurisdictions on Servelec s website at and Scarlet Bidco s website at by no later than 12 noon (London time) on 1 December For the avoidance of doubt, the contents of those websites are not incorporated into and do not form part of this document. 5

6 Servelec Shareholders may request a hard copy of this document by contacting Link Asset Services at 34 Beckenham Road, Beckenham, Kent, BR3 4TU or on or if calling from outside the UK on +44 (0) 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. Link Asset Services is open between 9.00 a.m. to 5.30 p.m., Monday to Friday excluding public holidays in England and Wales. 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. This document is dated 1 December

7 TO VOTE ON THE OFFER This page should be read in conjunction with the rest of this document and, in particular, the section headed ACTIONS TO BE TAKEN set out on pages 26 to 27 of this document and the notices of the Court Meeting and the General Meeting at the end of this document. Whether or not you plan to attend the Meetings, you should: 1. complete, sign and return the blue Form of Proxy for use at the Court Meeting, or alternatively, if you hold your Servelec Shares in CREST, appoint a proxy through the CREST electronic proxy appointment service, so as to be received by no later than a.m. on 20 December 2017; and 2. complete, sign and return the yellow Form of Proxy for use at the General Meeting, or alternatively, if you hold your Servelec Shares in CREST, appoint a proxy through the CREST electronic proxy appointment service, so as to be received be no later than a.m. on 20 December IT IS IMPORTANT THAT, FOR THE COURT MEETING, AS MANY VOTES AS POSSIBLE ARE CAST SO THAT THE COURT MAY BE SATISFIED THAT THERE IS A FAIR AND REASONABLE REPRESENTATION OF SCHEME SHAREHOLDER OPINION. YOU ARE THEREFORE STRONGLY URGED TO COMPLETE, SIGN AND RETURN YOUR FORMS OF PROXY OR APPOINT A PROXY THROUGH THE CREST ELECTRONIC PROXY APPOINTMENT SERVICE (AS APPROPRIATE) AS SOON AS POSSIBLE. If the blue Form of Proxy for the Court Meeting is not returned by the above time, it may be handed to Link Asset Services on behalf of the Chairman of the Court Meeting before the start of the Court Meeting. However, in the case of the General Meeting, if the yellow Form of Proxy is not returned so as to be received by the time mentioned above and in accordance with the instructions on the Form of Proxy it will be invalid. CREST members who wish to appoint a proxy or proxies through the CREST electronic proxy appointment service may do so by using the procedures described in the CREST Manual. CREST personal members or other CREST sponsored members and those CREST members who have appointed (a) voting service provider(s), should refer to their CREST sponsor or voting service provider(s), who will be able to take the appropriate action on their behalf. In order for a proxy appointment or instruction made by means of CREST to be valid, the appropriate CREST message (a CREST Proxy Instruction ) must be properly authenticated in accordance with Euroclear s specifications and must contain the information required for such instructions as described in the CREST Manual (available via The message, regardless of whether it constitutes the appointment of a proxy or an amendment to the instructions given to a previously appointed proxy must, in order to be valid, be transmitted so as to be received by Servelec s registrar, Link Asset Services (participant ID RA10), not later than a.m. on 20 December 2017 in the case of the Court Meeting and not later than a.m. on 20 December 2017 in the case of the General Meeting (or, in the case of an adjourned meeting, not less than 48 hours (excluding non-working days) prior to the time and date set for the adjourned meeting). For this purpose, the time of receipt will be taken to be the time (as determined by the time stamp applied to the message by the CREST Applications Host) from which Link Asset Services is able to retrieve the message by enquiry to CREST in the manner prescribed by CREST. CREST members and, where applicable, their CREST sponsors or voting service provider(s), should note that Euroclear does not make available special procedures in CREST for any particular messages. Normal system timings and limitations will therefore apply in relation to the input of CREST Proxy Instructions. It is the responsibility of the CREST member concerned to take (or, if the CREST member is a CREST personal member or sponsored member or has appointed (a) voting service provider(s), to procure that his CREST sponsor or voting service provider(s) take(s)) such action as will be necessary to ensure that a message is transmitted by means of the CREST system by any particular time. CREST members and, where applicable, their CREST sponsors or voting service provider(s) are referred, in particular, to those sections of the CREST Manual concerning practical limitations of the CREST system and timings. 7

8 Servelec may treat as invalid a CREST Proxy Instruction in the circumstances set out in Regulation 35(5)(a) of the Regulations. The completion and return of Forms of Proxy or the submission of a proxy via the CREST electronic proxy appointment service will not prevent you from attending and voting at the Court Meeting and/or General Meeting, or any adjournments of those meetings, in person if you wish and are entitled to do so. Shareholder helpline If you have any questions about this document, the Court Meeting or the General Meeting or how to complete the Forms of Proxy or to appoint a proxy through the CREST electronic proxy appointment service, please contact Link Asset Services at 34 Beckenham Road, Beckenham, Kent, BR3 4TU or on or if calling from outside the UK on +44 (0) 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. Link Asset Services is open between 9.00 a.m. to 5.30 p.m., Monday to Friday excluding public holidays in England and Wales. Please note that Link Asset Services cannot provide any financial, legal or tax advice and calls may be recorded and monitored for security and training purposes. 8

9 EXPECTED TIMETABLE OF PRINCIPAL EVENTS The following indicative timetable sets out expected dates for the implementation of the Scheme. If any of the dates and/or times in this expected timetable change, the revised dates and/or times will be notified to Servelec Shareholders by announcement through a Regulatory Information Service. Event Latest time for lodging Forms of Proxy for the: Time and/or date Court Meeting (blue form) a.m. on 20 December 2017 (1) General Meeting (yellow form) a.m. on 20 December 2017 (2) Voting Record Time for the Court Meeting and the General Meeting 6.00 p.m. on 20 December 2017 (3) Court Meeting a.m. on 22 December 2017 General Meeting a.m. on 22 December 2017 (4) The following dates are indicative only and are subject to change (5) Court Hearing 12 January 2018 Last day of dealings in Servelec Shares 12 January 2018 Suspension of listing of and dealings in, Servelec Shares 5.00 p.m. on 12 January 2018 Scheme Record Time 6.00 p.m. on 12 January 2018 Effective Date of the Scheme 15 January 2018 ( D ) Cancellation of listing of Servelec Shares by 8.00 a.m. on D+1 Latest date for despatch of cheques and crediting of CREST for cash consideration due under the Scheme by D+14 Long Stop Date 28 February 2018 (1) It is requested that blue Forms of Proxy for the Court Meeting be returned not later than a.m. on 20 December 2017 (or, if the Court Meeting is adjourned, 48 hours (excluding non-working days) before the time of such adjourned meeting. Blue Forms of Proxy not so returned may be handed to Link Asset Services on behalf of the Chairman of the Court Meeting before the start of the Court Meeting). (2) Yellow Forms of Proxy for the General Meeting must be returned not later than a.m. on 20 December 2017 (or, if the General Meeting is adjourned, 48 hours (excluding non-working days) before the time of such adjourned meeting). (3) If either the Court Meeting or the General Meeting is adjourned, the Voting Record Time for the relevant adjourned meeting will be the close of business on the day which is two days (excluding non-working days) prior to the date of the adjourned meeting. (4) Or as soon thereafter as the Court Meeting is concluded or adjourned. (5) These dates are indicative only and will depend, amongst other things, on the date upon which (i) the Conditions are satisfied or (if capable of waiver) waived (ii) the Court sanctions the Scheme and (iii) the Court Order is delivered to the Registrar of Companies. All references in this document to times are to London, England time unless otherwise stated. 9

10 TABLE OF CONTENTS Page PART ONE LETTER FROM THE CHAIRMAN OF SERVELEC 12 Introduction 12 Summary of the terms of the Offer 12 Background to and reasons for the Offer 13 Background to and reasons for the Servelec Board recommendation 13 Irrevocable undertakings and letters of intent 14 Information on Servelec 14 Information on Montagu 15 Information on Scarlet Bidco 15 Servelec trading update 15 Employees, management and locations 15 Servelec Employee Share Schemes 17 Action to be taken by Servelec Shareholders 17 Overseas Shareholders 17 The Scheme and the Meetings 17 Modifications to the Scheme 18 United Kingdom taxation 18 Recommendation 18 Further information 18 PART TWO EXPLANATORY STATEMENT 19 Introduction 19 Summary of the terms of the Offer and the Scheme 20 Financing the Offer 22 Servelec Meetings 22 The Servelec Directors and the effect of the Scheme on their interests 24 De-listing of Servelec Shares and settlement of cash consideration 24 United Kingdom taxation 25 Employee Share Schemes 26 Overseas holders 26 Actions to be taken 26 Further information 28 PART THREE CONDITIONS TO THE IMPLEMENTATION OF THE SCHEME AND TO THE OFFER 29 Conditions to the Offer 29 Certain further terms of the Offer 36 PART FOUR THE SCHEME OF ARRANGEMENT 38 Transfer of Scheme Shares 40 Consideration for the transfer of Scheme Shares 40 Share certificates and cancellation of CREST entitlements 41 Despatch of consideration 41 Dividend mandates 42 Operation of this Scheme 42 Modification 42 Governing law 42 10

11 Page PART FIVE FINANCIAL INFORMATION 43 Scarlet Bidco financial information incorporated by reference 43 Effect of Scheme becoming effective on Scarlet Bidco 43 Servelec financial information incorporated by reference 43 Hard copies of Servelec financial information 43 No incorporation of website information 43 PART SIX ADDITIONAL INFORMATION FOR OVERSEAS SHAREHOLDERS 44 General 44 US securities laws 44 US taxation 45 UK taxation of certain overseas Shareholders 46 PART SEVEN ADDITIONAL INFORMATION ON SERVELEC AND SCARLET BIDCO 48 Responsibility 48 Directors and Montagu Investment Committee Members 48 Interests in Servelec Shares 49 Interests and dealings General 51 Directors service contracts and emoluments 52 Market quotations 54 Material contracts 54 Offer-related arrangements 55 Irrevocable undertakings and letters of intent 55 Offer-related fees and expenses 57 Financing arrangements relating to Scarlet Bidco 57 Ratings 57 Cash confirmation 58 Persons acting in concert 58 No significant change 58 Consent 58 Documents available for inspection 58 Sources of information and bases of calculation 59 PART EIGHT DEFINITIONS 60 PART NINE NOTICE OF COURT MEETING 65 PART TEN NOTICE OF GENERAL MEETING 68 11

12 PART ONE LETTER FROM THE CHAIRMAN OF SERVELEC GROUP PLC (Incorporated in England and Wales with registered number ) Directors: Richard Last (Chairman and Non-Executive Director) Alan Russell Stubbs (Chief Executive Officer) Michael Geoffrey Cane (Chief Financial Officer) Roger Steven McDowell (Senior Independent Non-Executive Director) Registered office Servelec Group plc Rotherside Road Eckington South Yorkshire S21 4HL 1 December 2017 To the holders of Servelec Shares and, for information only, to holders of options or awards under the Servelec Share Schemes Dear Shareholder RECOMMENDED CASH OFFER FOR SERVELEC BY SCARLET BIDCO 1. Introduction On 23 November 2017 the boards of directors of Servelec and Scarlet Bidco Limited ( Scarlet Bidco ) announced that they had agreed the terms of a recommended cash offer pursuant to which Scarlet Bidco will acquire the entire issued and to be issued ordinary share capital of Servelec. I am writing to you today to set out the background to the Offer and the reasons why the Servelec Directors consider the terms of the Offer to be fair and reasonable and are unanimously recommending that you vote in favour of the Offer. Servelec Shareholders should read the whole of this document. In particular, I draw your attention to the letter from Investec set out in Part Two of this document which gives details about the Offer and to the additional information set out in Part Seven of this document. In order to approve the terms of the Offer, Scheme Shareholders will need to vote in favour of the resolutions to be proposed at the Court Meeting and the General Meeting, to be held on 22 December 2017 at the offices of Investec Bank plc at 2 Gresham Street, London, EC2V 7QP, United Kingdom. Details of the actions you are asked to take are set out in paragraph 10 of Part Two of this document. The recommendation of the Servelec Directors is set out in paragraph 17 of this letter. 2. Summary of the terms of the Offer The Offer, if approved, will be implemented by way of a scheme of arrangement between Servelec and Scheme Shareholders under Part 26 of the Companies Act Under the terms of the Offer, which will be subject to the terms and conditions set out in Part Three, Scheme Shareholders at the Scheme Record Time will be entitled to receive: for each Servelec Share pence in cash The Offer values the entire issued and to be issued ordinary share capital of Servelec at approximately million, and represents: a premium of approximately 19.8 per cent. to the Closing Price per Servelec Share of pence on 22 November 2017 (being the latest practicable date prior to the publication of the Announcement); a premium of approximately 27.1 per cent. to the Volume Weighted Average Price per Servelec Share of pence for the three months ended 22 November 2017 (being the latest practicable date prior to the publication of the Announcement); and a premium of approximately 22.5 per cent. to the Volume Weighted Average Price per Servelec Share of pence for the six months ended 22 November 2017 (being the latest practicable date prior to the publication of the Announcement). 12

13 If, after the date of the Announcement, any dividend and/or other distribution and/or other return of capital is declared, made or paid or becomes payable in respect of the Servelec Shares, Scarlet Bidco reserves the right to reduce the Offer Price by an amount up to the amount of such dividend and/or distribution and/or return of capital. The Offer is subject to the conditions set out paragraph 1 of Part Three of this document, including the sanction of the Scheme by the Court by the Long Stop Date. 3. Background to and reasons for the Offer Scarlet Bidco believes that the Servelec Group is one of the UK s leading technology businesses with strong, diverse product sets and market positions in both of its divisions. The Servelec Group has established and brought together a number of complementary businesses in Servelec HSC and has established specialist capabilities in Servelec Automation. Scarlet Bidco, supported by Montagu, believes that it would be the best partner for the Servelec Group through its next stage of development as it seeks to capitalise on future growth opportunities. Montagu has significant experience of working with software and technology companies, bringing the benefits of its financial resources to help them achieve their longer term goals. Scarlet Bidco and Montagu believe that private ownership will enable Servelec to pursue opportunities that it would not be able to on the public markets. Scarlet Bidco will explore all options to support further growth by investing in operations, expanding the Servelec Group s domestic and international footprint and pursuing acquisition opportunities. 4. Background to and reasons for the Servelec Board recommendation The Servelec Directors, in conjunction with its financial adviser, Investec, conducted a comprehensive review of the Servelec Group s strategic position. This review considered, amongst other options, the sale of the Servelec Group as a whole and the sale of one or both of the divisions. The review concluded that a sale of Servelec HSC would leave a sub-scale Automation business, whereas the sale of Servelec Automation would not provide sufficient additional financing to pursue Servelec HSC s organic and acquisitive growth strategy and as such a sale of the Servelec Group as a whole would be in the best interests of Servelec Shareholders. The Servelec Directors have evaluated the Offer on behalf of Servelec Shareholders as a whole and have held detailed discussions regarding the terms of the potential acquisition of Servelec by Scarlet Bidco. These discussions have resulted in the Offer at a price of pence in cash for each Servelec Share. In evaluating the Offer, the Servelec Directors have considered the interests of Servelec s employees and customers, as well as the economic benefits to Servelec Shareholders. Whilst the Servelec Directors believe there is potential for future growth in the equity value of the Servelec Group for Servelec Shareholders, they recognise that the Servelec Group operates in a number of distinct markets, each of which is competitive and requires a different strategy. Given this context and the Group s business models, the Servelec Directors recognise the benefits to Servelec in having a partner like Scarlet Bidco, supported by Montagu s international presence, relevant industry network and commitment to the ongoing investment requirements of the Servelec Group. The Offer will provide the Servelec Group with enhanced financial and operational flexibility as it seeks to execute its strategy. The Servelec Directors have assessed the benefits of maintaining an independent public markets listing and the potential future growth in equity value for Servelec Shareholders against the inherent uncertainty of delivering this future value that exists in any business. The Servelec Directors have further considered the certainty for Servelec Shareholders of realising the value of their investment in cash and at an attractive premium to both the current share price and the share price of 179 pence per Servelec Share at the time of its initial public offering on 2 December

14 5. Irrevocable undertakings and letters of intent Scarlet Bidco has received irrevocable undertakings from each of the Servelec Directors to vote in favour of the Scheme at the Court Meeting and the resolution to be proposed at the General Meeting, in respect of their entire beneficial holdings amounting to, in aggregate, 1,522,374 Servelec Shares, representing approximately 2.2 per cent. of the issued ordinary share capital of Servelec as at 30 November 2017 (being the latest practicable date prior to the publication of this document). Scarlet Bidco has also received irrevocable undertakings to vote in favour of the Scheme at the Court Meeting and the resolution to be proposed at the General Meeting from Herald Investment Management Limited (on behalf of Herald Investment Trust plc), LOIM, Marlborough Fund Managers Limited and NFU Mutual Insurance Society Limited in respect of in aggregate 7,602,938 Servelec Shares representing approximately 10.9 per cent. of the issued Ordinary Share Capital of Servelec as at 30 November 2017 (being the latest practicable date prior to the publication of this document). Further Scarlet Bidco has received non-binding letters of intent from GVQ Investment Management Limited, Invesco Asset Management Limited and Schroder Investment Management Limited to vote in favour of the Scheme at the Court Meeting and the resolution to be proposed at the General Meeting in respect of, in aggregate, 17,453,600 Servelec Shares representing, approximately 25.0 per cent. of the issued ordinary share capital of Servelec as at 30 November 2017 (being the latest practicable date prior to publication of this document). Scarlet Bidco had previously received a letter of intent from Harwood Capital LLP (on behalf of Oryx International Growth Fund Limited) in respect of its holding of 900,000 Servelec Shares. Harwood Capital LLP has notified Scarlet Bidco that it no longer holds any Servelec Shares. Scarlet Bidco has therefore received irrevocable undertakings or letters of intent in respect of a total 26,578,912 Servelec Shares representing, in aggregate, approximately, 38.1 per cent. of the issued of the issued ordinary share capital of Servelec as at 30 November 2017 (being the latest practicable date prior to the publication of this document). Further details of these irrevocable undertakings (including the circumstances in which they will fall away) and these letters of intent are set out in paragraph 9 of Part Seven of this document. 6. Information on Servelec Servelec is a UK-headquartered technology group, with significant intellectual property, providing software, hardware and services to the healthcare, social care and education, oil and gas, energy and utilities sectors. Servelec was founded in 1977 and has a strong technology and engineering heritage. Servelec completed its initial public offering, listing on the Official List of the UKLA and being admitted to trading on the Main Market of the London Stock Exchange, on 2 December 2013 at a share price of 179 pence per Servelec Share, valuing the Group at million. Since then, the Group has pursued a combined organic and acquisitive growth strategy, completing four acquisitions, funded by internally generated cash and bank debt. The Servelec Group operates internationally and employs a highly skilled and knowledgeable workforce of approximately 600 people across its two divisions: Servelec HSC and Servelec Automation. Servelec HSC specialises in the design, development, deployment and support of software in healthcare together with social care and education within local government. Servelec HSC has over 20 years experience in developing clinically-driven, enterprise-wide solutions for use within the NHS and private healthcare organisations and has a software suite that covers Electronic Patient Records, Patient Administration Systems, Patient Flow Bed Management, Clinical Information Systems, e-observations, and e-prescribing technologies which are fully supported on mobile and portal solutions. Within a social care setting, Servelec provides its case management system across adults, children and finance, supporting all the activities of a social care practice (case notes, reviews and demographic details) and also includes financial management systems (contract management, budget reviews, payments) to control effectively all financial elements related to the delivery of social care all of which are fully supported on mobile and portal solutions. Supporting education services within local government, the Synergy suite records and manages all aspects of children s services to enable information sharing and provide full visibility of each and every individual giving users the insight they need to make key decisions, resulting in improved outcomes for children and young people. 14

15 Servelec Automation provides complex, mission-critical control systems and standalone products to large, blue-chip companies in industries essential to national infrastructure. Servelec Automation operates through two distinct businesses. Servelec Controls develops and integrates mission-critical systems for blue-chip clients in national infrastructure sectors by bringing together specialist hardware, software and world-class engineering to provide control, monitoring and safety solutions. Vendor independent solutions save organisations time and money, minimising risk in hazardous and volatile settings. Servelec Technologies provides a range of hardware and software that delivers end-to-end data acquisition, management, control and optimisation, to make customer operations more efficient and effective. Working across global infrastructure sectors including water, rail, energy, navigation and broadcast, Servelec Technologies sells telemetry products, including remote telemetry units ( RTU s ) and associated software solutions through a global distribution network. 7. Information on Montagu Montagu is one of Europe s longest standing private equity firms and has been successfully investing in leading mid-market businesses for nearly fifty years. Since its formation in 1968, Montagu has invested in over 400 companies, across many different industry sectors including software, technology, transport, logistics, healthcare, business services, manufacturing and others. As at 31 October 2017, Montagu had 5.8 billion of assets under management. Montagu s investment model involves developing a company s strategy in cooperation with management and providing the financial, strategic and operational support necessary to realise it. Montagu focuses on supporting incumbent management teams and has significant experience in helping businesses execute on a range of growth strategies, for instance in supporting M&A, expanding internationally and investing into core operations. Montagu has a long track record of investing in software, healthcare and industrial technology businesses similar to Servelec. Previous and current examples include Clinisys, a clinical laboratory information management company, Open GI, an insurance software company and ADB, an industrial technology company. 8. Information on Scarlet Bidco Scarlet Bidco is a newly incorporated company which is indirectly held by the Montagu Funds. Scarlet Bidco was formed for the purpose of implementing the Offer. It has not traded prior to 30 November 2017 (being the last practicable date prior to the date of this document) nor has it entered into any obligations other than in connection with the Offer. 9. Servelec trading update On 11 September 2017, Servelec released its Interim Results for the six month period ended 30 June 2017, a copy of which can be found at Since 30 June 2017, Servelec has continued to trade materially in line with revised expectations. In Servelec HSC, Corelogic has recently signed a large Mosaic contract which helps to underpin the current year s expectations, however there are delays in decisions on other Social Care procurements, which had previously been anticipated for Q In Servelec Automation, large AMP-6 RTU opportunities have not yet materialised and the Board continues to monitor the previously advised 2.6 million debt position in Turkey where there has been no material progress. 10. Employees, management and locations Scarlet Bidco attaches importance to the skills, experience and industry knowledge of the existing management and employees of Servelec. It has worked closely with the Servelec management team to understand the key areas of their strategy and plans for the business. Following Completion of the Offer Scarlet Bidco intends to support the Servelec Group and its employees in executing management s existing plans which entails: 15

16 in Servelec HSC, continuing to support the existing product range and customer base, as well as continuing to invest in development of the product range; and in Servelec Automation, continuing to invest in the division s hardware and software products and further building on the division s sales and distribution infrastructure. Under Servelec management s existing plans, Scarlet Bidco understands that there is no expectation of changes that would materially impact the number of Servelec employees or their conditions of employment (including their entitlement to pensions contributions), the location of Servelec s places of business or its fixed assets. Following completion of the Offer, Scarlet Bidco intends to work with Servelec management to complete a full evaluation of the Servelec Group and its strategy, operations and organisational structure which will consider both the short and long-term objectives for the business. The evaluation will focus on all aspects of the Servelec business and the opportunities available to it, including: investing in existing product ranges across the Servelec Group to ensure that they meet the needs of existing and future clients; developing new product ranges to take advantage of growth opportunities fitting the capabilities of the business, particularly where Servelec s expertise and extensive intellectual property brings a competitive advantage; both investing in existing and developing new, distribution channels to expand the addressable market both domestically and internationally; and making bolt-on acquisitions of companies that support the overall strategy of expanding the product ranges and the addressable customer base across both divisions. Scarlet Bidco does not reasonably expect that this evaluation will lead to any changes that would materially impact the number of Servelec employees or their conditions of employment (including their entitlement to pensions contributions), the locations of Servelec s places of business or its fixed assets. As part of the evaluation of the Servelec Group, Scarlet Bidco will consider whether to maintain both divisions as part of the Servelec Group or to move towards a business model of two separate standalone companies. In the event of a split into two separate companies, each company would cease to be part of a single Servelec Group. Scarlet Bidco does not reasonably expect that this would result in changes that would materially impact the number of employees within each company or their conditions of employment (including their entitlement to pensions contributions), the locations of each company s existing and future places of business or each company s fixed assets. Following completion of the Offer, the existing employment rights, including pension rights, of the management and employees of Servelec will be fully safeguarded. Each of Richard Last and Roger McDowell has confirmed that he intends to resign from the Servelec Board conditional upon and with effect from, the Scheme becoming effective. Following the Effective Date, it is likely that Scarlet Bidco will put in place incentivisation scheme(s) for certain members of the Servelec management team. Scarlet Bidco envisages that the incentivisation under these scheme(s) would allow, subject to the performance of the Servelec Group, such persons and other senior employees to participate in an element of the proceeds on any future sale of the Servelec Group. At the time of this document, there have been no discussions in respect of the terms of any such arrangements with any person. The Servelec Board welcomes Scarlet Bidco s intention to support the existing strategy of the Servelec management team and to continue investing in developing the Servelec Group. The Servelec directors acknowledge that Scarlet Bidco will evaluate the business following completion of the Offer and understand the likely areas of focus of such evaluation. The Servelec Directors do not expect this will result in any changes materially impacting the number of employees within the Servelec Group or their conditions of employment (including their entitlement to pensions contributions), the locations of each of Servelec Group s existing and future places of business or Servelec Group s fixed assets. 16