Acquisition of ECF Asset Fina

RNS Number : 5663W

Manx Financial Group PLC

22 November 2010

FOR IMMEDIATE RELEASE 22 November 2010

Manx Financial Group PLC

(the 'Group')

Acquisition of ECF Asset Finance PLC

Manx Financial Group PLC announces that it has acquired the entire share capital of ECF Asset Finance PLC (http://www.ecfgroup/assetfinance.co.uk), an asset finance house formed over 19 years ago to provide asset backed finance to UK based Small and Medium sized Entities ("SME's"). The acquisition has been made by Bradburn Limited, a wholly owned subsidiary registered in Isle of Man.

The Group's directors believe that the SME market sector has been neglected in the current climate by many UK high street banks. There are, however, many dynamic businesses that believe investing in their key assets will deliver efficiencies in the current economic climate. In ECF Asset Finance PLC ('ECF'), the Group has acquired a company with close relationships to the commercial market. Equally importantly, ECF possess the underwriting skills to help effectively manage our risk at this key point in the economic cycle.

ECF offers a diverse portfolio of finance products to UK based companies, including but not limited to: sale and leaseback agreements; finance leases; hire purchase agreements and commercial loans. ECF employs 16 members of staff from its office in Manchester.

The Group, through its wholly owned banking subsidiary Conister Bank Limited, already lends in the UK and the customer overlap between the two target markets has been assessed and is not material. ECF will not only become a new lending catalyst for the Group but will also bolster the Group's existing UK based sales and collection teams.

This acquisition offers opportunities for earnings growth, both initially, and through the ongoing servicing of the corporate market as the Group has acquired ECF's current loan book with a healthy pipeline of committed proposals.

For the year ended 31 December 2009, ECF reported an audited consolidated loss on ordinary activities before exceptional provisions of £84,458 on a turnover of £3,242,827 and had net current assets of £15,704,466 as at that date. The Group has calculated that, by applying the Group's lower cost of funds, this loss on ordinary activities before exceptional provisions would have been transformed into a recorded profit of approximately £500,000 for that period.

The consideration for the entire share capital of ECF was £1. The Group's banking subsidiary, Conister Bank Limited, acquired the ECF loan book for £12,177,000. The ECF loan book has £14,300,000 of gross receivables. In addition, ECF had cash of approximately £1,090,000 at completion of the transaction which will be available to the Group.

The Group has calculated that its net loan book, as reported in the interim accounts at 30 June 2010, will, as a result of this acquisition, increase from £32,968,000 to £49,796,000 at completion and has sufficient liquidity to fund further growth between now and the year end.

Denham Eke, CEO of Manx Financial Group commented: "The acquisition of ECF is a very positive move for both MFG and Conister Bank as it will not only increase the value of our current loan book by over a quarter, but also will significantly increase interest income. The ECF team supplements our existing skills in sales, underwriting and collections, especially for commercial lending. The Group board continues to look for similar acquisition opportunities for growth and to enhance value for shareholders.".