Disposal of Legal Services Business & Cost Savings

RNS Number : 1346F

St James House PLC

13 July 2021

 

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES OF REGULATION 11 OF THE MARKET ABUSE (AMENDMENT) (EU EXIT) REGULATIONS 2019/310.

13 July 2021

ST. JAMES HOUSE PLC

  ("SJH", the "Group" or the "Company")

Disposal of Legal Services Business and Programme of Cost Savings

Disposal of Legal Services Business

The Board of Directors of the Company (the "Board") is pleased to announce that it has today entered into an agreement for the disposal of the Company's legal services subsidiary, St. Frances House Ltd. ("SFH") for a total cash consideration of £85,000 (the "Consideration"). SFH was established in 2020 to explore an emerging opportunity within the legal claims management sector. However, the Board has concluded that the required levels of ongoing investment that would be required to fully develop this opportunity, as well as management resources, can be better deployed within its payment services business. The transaction will have a positive impact on the Group's cashflow during the current financial year, with ongoing cost savings are estimated at £163,000 per annum, but will result in a charge to the profit and loss account and a reduction in net assets of approximately £40,000 during the current financial year. 

The purchaser of SFH,   Bryncae Legal Limited ("Bryncae"), will receive 100 per cent of the share capital of SFH. The Consideration payable to the Company is made up of an initial payment of £10,000, followed by 30 monthly payments of £2,500. The Consideration is guaranteed by Saith Cantref Cyf ("Saith"), over which SJH has been granted a debenture; Saith holds £57,500 of convertible loan stock in the Company. Both Bryncae and Saith are controlled by Jonathan Edwards, a director of SFH.  The Consideration will be applied by the Company for general working capital purposes.  Four employees of the Group, including Mr Edwards will be retained by SFH post the disposal, in accordance with UK TUPE continuity of employment regulations.

Related Party Transaction

As Mr Edwards is a director of a Group company and controls Bryncae, the Transaction constitutes a related party transaction under the AIM Rules for Companies. The Board considers, having consulted with Allenby Capital Limited, the Company's nominated adviser, that the terms of the transaction are fair and reasonable insofar as the Company's shareholders are concerned.

Programme of Cost Savings

As announced on 25 March 2021, the Company entered into a commercial agreement with Tintra Acquisitions Ltd and Tintra Holdings Ltd, subsequent to which John Cripps and Richard Shearer joined the Board on 20 April and 2 July 2021 respectively.  As part of this agreement, a comprehensive review of the Group is ongoing and a business plan has been prepared; this has included a full review of roles and responsibilities of employees and consultants which has been carried out across the Group and has resulted in a restructure to align salary costs with the volume of business and needs of the Group. This leads to a reduction in our annual remuneration costs of circa £250,000 (equal to around one-third of the total remuneration costs of the reviewed roles).

During the next 2 months the Group expects to strengthen the management team of its payment services division, and is seeking to appoint a Business Development Director, Head of Operations and an Internal Operations Manager all in line with the growth strategy detailed in the business plan.

Historically the business has recruited consultants to execute key roles, however, going forward all personnel will be salaried and supported by independent non-executive directors further in line with the revised strategy of the Group and in line with best practice.

The combined cost reductions outlined above that total around £415,000 will "right size" the business for its current operation, and will allow the business to operate more efficiently as the business prepares for future growth.  The Board intends to provide further details of its growth strategy ahead of the Company's annual general meeting to be held on 30 July 2021.

For further information, contact:

St. James House PLC Roger Matthews Website www.sjhplc.com	020 3655 5000
Allenby Capital Limited (Nomad, Financial Adviser & Broker) John Depasquale / Nick Harriss	020 3328 5656

 

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