TIDMMFX
RNS Number : 5272L
Manx Financial Group PLC
16 May 2022
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES
OF THE MARKET ABUSE REGULATION (EU No. 596/2014) ("MAR"). UPON THE
PUBLICATION OF THIS ANNOUNCEMENT VIA A REGULATORY INFORMATION
SERVICE, THIS INSIDE INFORMATION IS NOW CONSIDERED TO BE IN THE
PUBLIC DOMAIN.
16 May 2022
Manx Financial Group PLC
("MFG" or the "Company")
Conditional Acquisition of 50.1% interest in Payment Assist
Limited
Option to acquire remaining 49.9% interest
Manx Financial Group PLC announces that Manx Ventures Limited
("Manx Ventures"), a wholly owned subsidiary of the Company, has
agreed to acquire a 50.1% interest (the "Acquisition") in UK
focused, point of sale lender Payment Assist Limited ("Payment
Assist") for a total initial consideration of GBP4 million payable
in cash. The Company has been working with Payment Assist since
2015, the Company's wholly owned subsidiary Conister Bank Limited
(the Isle of Man's only independent bank) having provided the
primary wholesale funding agreement to support Payment Assist's
growth during this period. The Acquisition is conditional on the
satisfaction of certain conditions precedent including approval of
the change of control by the Financial Conduct Authority ("FCA").
In addition to the Acquisition, Manx Ventures has agreed an option
to acquire the remaining 49.9% of Payment Assist for cash
consideration of up to GBP5 million (the "Option"). The Option can
be exercised by Manx Ventures at any time for a period of two years
after publication by Payment Assist of its audited accounts for the
period to 31 December 2024. MFG will fund the initial GBP4 million
consideration and deferred consideration of up to GBP5 million from
its cash resources.
Commenting on the Acquisition, Douglas Grant, CEO of the Company
commented: "The joint venture with Payment Assist continues our
strategy of acquiring interests in high quality specialist lenders.
We have witnessed first-hand the growth of Payment Assist over the
last 7 years and the Board believes that there is potential for
significant further growth. The Acquisition, with no dilution to
shareholders or external funding required, will position the
Company to capitalise on what we expect to be a high margin and
profitable business now and in the future. The option positions the
Company to acquire the remaining 49.9% of Payment Assist at an
attractive valuation if the business grows as the Company expects
over the next three years. We have started the process of engaging
with the FCA to obtain their approval for the proposed change of
control and will make an announcement to update the market once
this is received."
Neil Jeffery, Chief Executive Officer of Payment Assist
commented: "I am delighted to secure a long-term partnership with
the Manx Financial Group, We have worked well with Conister Bank
over the last 7 years and are confident the partnership with Manx
Ventures, and continued support from Conister Bank as we grow the
business, will position Payment Assist to continue to be a leading
point of sale lender in the UK and support our growth into new
products and sectors."
Highlights
Ø Payment Assist, the UK's leading automotive repair
point-of-sale finance provider, working with premier national
chains such as National Tyres, Halfords and Formula One
Ø Payment Assist has now diversified lending into insured products and retail
Ø Payment Assist loan book of GBP21.3 million as at 31 December
2021, an increase of 72% since 2019
Ø Payment Assist achieved revenue of GBP6.6 million in the 12
months to 31 December 2021, an increase of 69% since 2019
Ø Payment Assist EBITDA of GBP2.5 million for the period to 31
December 2021, an increase of 108% since 2019
Ø Payment Assist provided finance for over 170,000 customers in
the 12 months to 31 December 2021, an increase of 43% since
2019
Ø Transaction structure means no dilution to Company's
shareholders; acquisition financed from Company's available cash
and debt
Ø Payment Assist management team retain 49.9% interest in business
Ø Option exercise price of up to GBP5 million sets an attractive
acquisition price should Payment Assist continue to grow with the
support of the Group
Key Terms of Acquisition
On 13 May 2022 Manx Ventures and the current shareholders of
Payment Assist (the "Vendors") being Neil Jeffrey, Colin Ellard,
Spencer Wrench and Simon Bevan signed a sale and purchase agreement
(the "Purchase Agreement") pursuant to which, subject to
satisfaction of certain conditions precedent as further detailed
below, Manx Ventures agreed to acquire 50.1% of the issued ordinary
shares of Payment Assist ("Sale Shares") for total cash
consideration of GBP4 million (the "Consideration"). In particular,
GBP2 million of the Consideration is payable by the Company within
five business days of finalising completion accounts to the date of
completion of the Acquisition (the "Completion Date"), with the
balance of GBP2 million payable after publication of the Payment
Assist audited accounts for the period to 31 December 2022. The
Consideration is subject to adjustment in accordance with the
Purchase Agreement, with Payment Assist to be acquired on a
cash-free/debt-free basis with completion accounts finalised within
105 days of the Completion Date.
The Acquisition is subject to customary conditions precedent to
closing, including most significantly, approval of the change of
control following the Acquisition by the FCA and other regulators
of the Company. The parties have agreed a long-stop date of 31
December 2022 for satisfaction (of conditions precedent, failing
which, unless agreed otherwise, the rights and obligations of the
parties under the Purchase Agreement shall lapse).
In the period between exchange of the Purchase Agreement on 13
May 2022 and the Completion Date, the Vendors and Payment Assist
have agreed to certain covenants to ensure the Company continues to
be operated in the ordinary course, and restricting the right of
the Vendors to transfer or otherwise encumber their shares. Manx
Ventures has the right to terminate the Purchase Agreement in the
event of a material adverse change to the business of Payment
Assist in the period prior to the Completion Date. The Vendors will
provide Manx Ventures with customary warranties regarding the
business and affairs of Payment Assist, with warranties to be
confirmed on 30 June 2022 and each day thereafter up to and
including the Completion Date.
Key Terms of Joint Venture Agreement
From the Completion Date, the parties shall be joint venture
partners, with the Vendors retaining a 49.9% interest in the issued
shares of Payment Assist. On Completion, the parties will execute
an agreed form of joint venture agreement (the "JV Agreement"),
setting out the rights of the parties as shareholders of the
Company. In particular, following Completion, Manx Ventures shall
have the right to appoint a majority of directors to the board of
Payment Assist. Neil Jeffery (the current CEO of Payment Assist)
and Colin Ellard (the current COO of Payment Assist) will remain as
directors of Payment Assist and will continue to operate the
business on a day-to-day basis following completion of the
Acquisition. The JV Agreement provides certain customary
protections for the Vendors as minority shareholders of the
Company, including in relation to future dilution and the related
party transactions.
Key Terms of the Option Agreement
On Completion, Manx Ventures and the Vendors will execute an
option agreement (the "Option Agreement") pursuant to which the
Vendors grant to Manx Ventures the right to acquire the balance of
49.9% of Payment Assist's issued shares (held by the Vendors) (the
"Option Shares") for consideration of up to GBP5 million. The
Option can be exercised by Manx Ventures at any time for a period
of two years after publication by Payment Assist of its audited
accounts for the period to 31 December 2024, with the exercise
price for the Option Shares based on an enterprise value for
Payment Assist on exercise of the Option equal to two times the
average net profits of Payment Assist in the three financial years
ending on 31 December 2024 (the "Option Period"), subject to a cap
of GBP5 million. In the event Mr Jeffery and/or Mr Ellard cease to
be employed by Payment Assist at any time during the Option Period,
other than in circumstances where they are a "good leaver", the
Company shall have the right to bring forward the date on which the
Company can exercise the Option in respect of the shares held by
the relevant individual.
About Payment Assist
Payment Assist was set up by Neil Jeffery and Colin Ellard in
2013 when they saw an opportunity in the automotive sector to try
and improve garage customer retention rates by providing a
financial solution to customers who could not immediately afford to
pay for all the work that was required to be completed on their
vehicle.
Payment Assist was granted its FCA permission in October
2014.
The opportunity to finance wills and trusts over longer periods
was then discussed with some longstanding contacts. Payment Assist
agreed to offer this facility initially on a trial basis, which has
been successful and was successfully expanded.
The broader retail market is one that Payment Assist are moving
into, in association with a number of key contacts within the
industry; building on their success seen in the automotive
sector.
Further details regarding the business and operations of Payment
Assist, and its lending terms and policies, can be found at its
website, https://www.payment-assist.co.uk
For the year ended December 2021, after all expenses, Payment
Assist reported an unaudited profit on ordinary activities of
GBP1.1 million and had as at that date net assets of GBP4.5
million. The results of Payment Assist will be consolidated with
those of the Company from Completion.
Further Information
For further information on the Company please contact:
Manx Financial Group Beaumont Cornish Limited Greentarget Limited
PLC
Denham Eke, Executive Roland Cornish/James Dafina Grapci-Penney
Vice Chairman Biddle Tel +44 (0) 203 963
Tel +44 (0)1624 694694 Tel +44 (0) 20 7628 1887
3396
Forward Looking Statements
This announcement contains statements about the Company and
Payment Assist that are or may be deemed to be "forward-looking
statements".
All statements, other than statements of historical facts,
included in this announcement 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", "may", "should", "anticipates",
"estimates", "projects", "would", "could", "continue" or words or
terms of similar substance or the negative thereof, are
forward-looking statements. Forward-looking statements include,
without limitation, statements relating to the following: (i)
future expenditures, expenses, revenues, earnings, synergies,
economic performance, indebtedness, financial condition, dividend
policy, losses and future prospects and (ii) business and
management strategies and the expansion and growth of the
operations of the Company and/or Payment Assist.
These forward-looking statements are not guarantees of future
performance. These forward-looking statements involve known and
unknown risks, uncertainties and other factors which may cause the
actual results, performance or achievements of any such person, or
industry results, to be materially different from any results,
performance or achievements expressed or implied by such
forward-looking statements. These forward-looking statements are
based on numerous assumptions regarding the present and future
business strategies of such persons and the environment in which
each will operate in the future. Investors should not place undue
reliance on such forward-looking statements and, save as is
required by law or regulation (including to meet the requirements
of the AIM Rules, MAR and/or the FSMA), the Company does not
undertake any obligation to update publicly or revise any
forward-looking statements (including to reflect any change in
expectations with regard thereto or any change in events,
conditions or circumstances on which any such statement is based).
All subsequent oral or written forward-looking statements
attributed to the Company or any persons acting on their behalf are
expressly qualified in their entirety by the cautionary statement
above. All forward-looking statements contained in this
announcement are based on information available to the Directors of
the Company at the date of this announcement, unless some other
time is specified in relation to them, and the posting or receipt
of this announcement shall not give rise to any implication that
there has been no change in the facts set forth herein since such
date.
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END
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