Acquisition of Edgewater Asso

RNS Number : 3489Q

Manx Financial Group PLC

02 August 2010

 



FOR IMMEDIATE RELEASE                                                                    2 August 2010

Manx Financial Group PLC (the 'Group')

Acquisition of Edgewater Associates Limited

Manx Financial Group PLC announces that it has acquired the entire share capital of Edgewater Associates Limited (http://www.edgewater.co.im), one of the Isle of Man's preeminent Independent Financial Advisors with over 14 years experience in the Isle of Man market. Edgewater Associates Limited ("Edgewater") is regulated by both the Financial Services Commission and the Insurance and Pensions Authority.

The transaction develops the Group's strategy by diversifying earnings beyond lending, growing competence in the "Wealth" market and continues the focus on the Isle of Man.

Edgewater has an established personal and commercial client base of over 5,000 accounts, and employs 15 staff. Edgewater offers a mix of wealth management, general insurance and life insurance advice and are at the forefront of the move from commission to fee based remuneration.

The acquisition offers extensive opportunities for earnings growth to both parties. Edgewater will immediately take responsibility for Conister Wealth. This will provide Edgewater with an opportunity to make available wealth management and ancillary services to her sister subsidiary's customers, Conister Bank Limited, and to offer Conister Bank savings and loan products to the Edgewater client base.

For the year ended 31 December 2009, Edgewater reported an audited consolidated income on ordinary activities before dividend of £361,543 on turnover of £996,722 and had at that date net assets of £264,689.

Edgewater will continue to be managed by its current executive: David Hathersich-Jones as Executive Chairman and Stephen Locking as Managing Director.

Consideration for the acquisition is £2 million, payable as to £1 million in cash and £1 million in new ordinary shares ("Consideration Shares") in the Group. The initial consideration payable on completion is £525,000 in cash and £475,000 in 3,392,857 initial Consideration Shares, issued at a price of 14p per share, with the deferred element becoming payable over the next 3 years on approval of the respective company accounts for each of the financial years ending 31 December 2010, 2011 and 2012. The deferred element, payable on the approval of the respective accounts, is:-

31 December 2010: £158,000 in cash and £175,000 payable in Consideration Shares;

31 December 2011: £158,000 in cash and £175,000 payable in Consideration Shares, and

31 December 2012: £159,000 in cash and £175,000 payable in Consideration Shares.

The Consideration Shares shall be issued on the basis of the mean average offer price of the Group's ordinary shares for the five business days immediately preceding the date on which the obligation arises. The cash consideration will be financed from existing cash resources.

It has also been agreed that an incentive commission will be paid to Edgewater's principals, calculated as to 40% of the EBITDA in excess of £400,000, £450,000 and £500,000 thresholds in each of the financial years ending 31 December 2010, 2011 and 2012 on a cumulative basis so as to make good any prior year or years' shortfall before triggering any additional consideration. The incentive commission will be payable 50% in cash and 50% in the Group's shares. Such additional shares will be issued at the same price as the Consideration Shares for that year.

Denham Eke, Chief Executive of the Group commented:

'We have been reviewing quality financial services businesses both on and off the Isle of Man as part of our growth strategy and the acquisition of Edgewater will bring experience and scale to our fledgling Wealth business, quality advice to our customers and instant bottom line benefit to the Group. We are delighted that Edgewater Associates have joined the Manx Financial Group and my colleagues and I look forward to working closely with David, Stephen and their team as we continue to build a leading financial services group of companies.'

David Hathersich-Jones, Executive Chairman of Edgewater responded:

'Whilst we have proved resilient to the wider economic climate, we have been looking for our next strategic move in order to provide Edgewater with a step change in its opportunities and we believe the Manx Financial Group will prove to be an excellent fit with our IFA business. This transaction will bring financial benefits to both companies as our complementary product ranges can be cross sold to both customer bases.'

Application is being made for the 3,392,857 new Ordinary Shares now being issued, which when issued will rank pari passu with the existing Ordinary Shares in issue, to be admitted to trading on AIM and dealings are expected to commence on Monday 9 August 2010.

Contacts

Manx Financial Group PLC

Denham Eke, Chief Executive

Tel: [phone]

Beaumont Cornish Limited

Roland Cornish

Tel: [phone]

Britton Financial PR

Tim Blackstone

Tel [phone]

 

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