Leaving Space for Brexit

Restructuring to introduce a new parent company incorporated in Ireland

02 January 2019
A photo of a SCISYS office

Hardly an organisation in the UK did not spend 2018 weighing up the implications of Brexit for its business and Burges Salmon has been working with its clients to consider mitigation strategies.

In the Autumn of 2017, Burges Salmon Corporate Finance partner Rupert Weston received a call from the directors of the software company SCISYS. AIM listed SCISYS has been a client of the firm since the mid 1980s and Rupert, who has been working with the business for well over a decade, joined the working group to discuss the impact of Brexit. This is of particular importance to SCISYS given its participation in important EU-funded contracts in the space sector. As a pan-European supplier of bespoke software systems and IT solutions to several industry sectors including space, government and defence, it was critical for SCISYS to identify a strategy to allow it to carry on working – post Brexit – with the European Space Agency and other EU agencies on projects like the Galileo satellite navigation programme.

Rupert says: 'What was helpful in those initial discussions was that we had an insight into other industries who were having similar conversations and facing similar issues. In that planning stage, being able to share those insights was helpful.'

Over many months, Rupert worked with the board to identify an approach that satisfied the participation requirements attached to the EU-funded work, as well as the demands of other stakeholders. The outcome was a decision to introduce a new parent company incorporated in Ireland and which retained both the group’s AIM listing and its UK tax residence. To facilitate investment in the group from across the EU, SCISYS also decided to seek a dual listing on Dublin’s Enterprise Securities Market.

While operating against a backdrop of uncertainty about the UK’s future relationship with Europe, the restructuring means SCISYS will be able to satisfy any applicable European Union residency requirements for EU-funded work. SCISYS has been involved in programmes like Galileo since the early system design phases, carrying out numerous EU-funded projects to establish the global network of sensor stations that monitor the signals sent from space satellites and uplink navigation data back to them.

The restructuring was implemented at the end of 2018 by means of a Court sanctioned scheme of arrangement.

'One of the complexities of this was managing a range of diverse stakeholder interests and aligning the approach to those interests with the requirements of the Court approval process,' continues Rupert.

Chris Cheetham, Finance Director at SCISYS, says: 'This restructuring followed months of planning and analysis. Burges Salmon has been by our side throughout that process, working collaboratively with us and providing invaluable support and guidance.'

As Rupert explains: 'One of the key challenges was the uncertainty as to the shape Brexit would take (or even the potential for it not to go ahead), and to maintain sufficient flexibility to reflect those potential variables.'

SCISYS was one of the first companies in its sector to put tangible mitigation plans into action, but Burges Salmon continues to work closely with many other clients weighing up their own Brexit contingency options in other industries.

Burges Salmon has been by our side throughout that process, working collaboratively with us and providing invaluable support and guidance.
Chris Cheetham, Finance Director at SCISYS

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