Acg Metals Regulatory News (ACG)

27 Jul 2006 07:03

Accuma Group PLC27 July 2006 Press Release 27 July 2006 Accuma Group Plc Acquisitions of Loan Line (Holdings) Limited and Byrom & Keeley Financial Services Limited Placing of Ordinary Shares to raise £18m Trading Update Accuma Group Plc ('Accuma' or the 'Group'), a leading provider of consumerfinancial solutions, is delighted to announce that it has conditionally agreedto acquire Loan Line (Holdings) Limited ('Loan Line'), a loan broker, and Byrom& Keeley Financial Services Limited ('Byrom Keeley'), a debt advisory company(together "the Acquisitions"). These Acquisitions transform Accuma fromoffering primarily IVAs to its clients into a comprehensive consumer financialsolutions provider that offers a full range of solutions designed to meet theindividual circumstances of over-extended consumers. In order to finance the cash element of the consideration for the acquisitions,Accuma has conditionally placed 6,666,667 new ordinary shares of 10p each("Ordinary Shares") at a price of 270p per share with institutional investors toraise £18 million ("the Placing"). Summary: • Acquisition of Loan Line, a loan broker, for an initial consideration of £10.5 million; • Acquisition of Byrom Keeley, a debt advisory company, for an initial consideration of £5.85 million; • Acquisitions in line with Accuma's stated strategy to provide a complete consumer financial solutions platform offering best advice based on individual circumstances; • Significantly accelerates the Group's growth; • Immediately earnings enhancing; • Provides substantial cross selling opportunities and synergies allowing the Group to maximise marketing spend, third party referral relationships and, therefore, reduce client acquisition costs; • Conversion rate from enquiries expected to increase from 4% to more than 30%. Commenting on the Acquisitions and the Placing, Charles Howson, Chief Executiveof Accuma Group plc, said: "These two acquisitions transform Accuma into a fullplatform consumer financial solutions provider; offering best advice to clientsbased on their individual circumstances. "Both acquisitions are immediately earnings enhancing and moreover they willsignificantly decrease the Group's client acquisition costs due to cross-sellingactivities and referrals between the Group's operating subsidiaries. "I am particularly pleased with the high level of institutional demand for thePlacing, which was significantly oversubscribed, and look forward to updatingshareholders of our progress at the Group's Preliminary Results in October." Information on Loan Line Loan Line was established in 1995 as a master broker specialising in securedlending, offering loans that it arranges through well established and recognisedlending institutions. Loan Line acts as an intermediary between indebted consumers (its clients) and awide panel of lenders, including major high street banks and finance companies.It primarily generates its business through the following sources: directmarketing, introducers and contracted arrangements with High Street banks forthe referral of declined loans. It uses bespoke processing software with theentire workflow being system driven. Loan Line currently has 29 staff and is based in Basingstoke, Hampshire. Thetable below sets out a summary of the audited turnover and profit before tax forthe three years ended 31 December 2005: 2003 2004 2005 £'000 £'000 £'000Turnover 3,702 4,669 5,441PBT (318) 603 1,228 In the year to 30 June 2006 Loan Line and its subsidiaries (the "Loan Line Group") recorded an unaudited profit before tax of £1.7 million on turnover of £7.3million. Terms of the Loan Line Acquisition The initial consideration for the acquisition of Loan Line (the "Loan LineAcquisition") is £10.5 million, to be satisfied as to £8.4 million in cash andas to £2.1 million by the issue of loan notes. Depending on the pre-tax profitsof the Loan Line Group from 1 August 2006 to 31 July 2008, additionalconsideration of up to a maximum of £8 million is payable to the Loan Linevendors, which may be satisfied by cash or the issue of Ordinary Shares at thesole discretion of Accuma. Information on Byrom Keeley Byrom Keeley was established in 2003 as a debt management company, acting as anintermediary between indebted consumers (its clients) and lenders. Through itswebsites, Byrom Keeley offers a range of informal debt consolidation andsettlement solutions to approximately 3,000 clients and primarily generates itsbusiness through the internet and a number of introducers. Byrom Keeley is based in Manchester with 25 staff. The table below sets out asummary of the unaudited turnover and profit before tax for the three yearsended 31 December 2005: 2003 2004 2005 £'000 £'000 £'000Turnover 349 1,050 1,949PBT 19 303 650 In the six months to 30 June 2006 Byrom Keeley recorded an unaudited profitbefore tax of £450,000 on turnover of £1.18 million. Terms of the Byrom Keeley Acquisition The initial consideration for the acquisition of Byrom Keeley (the "Byrom KeeleyAcquisition") is £5.85 million, to be satisfied in cash. Depending on thepre-tax profits of Byrom Keeley from 1 January 2006 to 31 December 2008,additional consideration of up to a maximum of £9.15 million is payable to theByrom Keeley vendors, which is to be satisfied by a mixture of cash and OrdinaryShares. The two Acquisitions are not inter-conditional but are each conditional, interalia, on the passing of the resolution to be proposed at an EGM to be convenedfor 21 August 2006, Admission and the Placing Agreement becoming unconditionalin all respects. Reasons for the Acquisitions The Group's stated strategy is to be able to provide a complete consumerfinancial solutions platform to its clients. By doing so, the Group will beable to offer best advice and provide solutions to a higher percentage ofprospective clients than is currently possible. Based on historic conversion rates in Accuma and the Acquisitions, the Boardexpects that the Acquisitions will lead to an increase in the conversion ratesof inquiries from potential clients from 4 per cent at present (as the Group hasto date only been able to offer IVAs) to more than 30 per cent. for the EnlargedGroup (as the Enlarged Group will be able to offer a range of financialsolutions, including debt management services and loans). In addition, the Board expects the Acquisitions to: • maximise the benefit of marketing spend and third party referrals; • accelerate the Enlarged Group's growth; and • be immediately earnings enhancing. The Directors are confident of their ability to integrate Loan Line and ByromKeeley (together the "Target Companies") quickly and effectively for thefollowing reasons: • the Target Companies have relatively few staff (the Enlarged Group will have around 200 employees, compared with 140 at present); • the Target Companies have effective management information systems based around key performance indicators; and • management of the Target Companies will be locked-in both through their service contracts and earn-out incentives. The Directors intend that each of the Target Companies will operateindependently although where the Group's strategy of offering best advicedictates, there will be significant cross-referral opportunities. Placing Daniel Stewart & Company plc ("Daniel Stewart"), the Company's nominated adviserand broker, has conditionally placed 6,666,667 new Ordinary Shares to raiseapproximately £18 million before expenses at 270p per new Ordinary Share. The proceeds of the Placing will be used to satisfy the initial cash element ofthe consideration for the Acquisitions, including the loan notes being issued inconnection with the Loan Line Acquisition, and to pay for the expenses of theAcquisitions and the Placing. The Placing is conditional, inter alia, on the passing of the Resolution,either, but not both, of the Acquisitions becoming unconditional in all respectssave only for Admission (save that if one of the Acquisition Agreements isterminated before Admission or if any of the conditions set out in either, butnot both, of the Acquisition Agreements (other than Admission) are no longercapable of being satisfied prior to Admission, the Placing will proceed butshall be reduced to such an amount as Daniel Stewart and the Company agree). ThePlacing is not being underwritten. The Placing Shares are expected to beadmitted to trading on AIM on 22 August 2006. The Placing requires the approval of shareholders and an EGM is being convenedfor 21 August 2006. Trading Update Based on historic conversion rates Accuma expects 270 IVA cases to be completedin the month of July 2006 and the Board is confident that the Group will meetmarket expectations for the year ending 31 July 2006. The Group became cashgenerative at the end of June 2006. Since the publication of the Group's Interim Results for the six months ended 31January 2006, Accuma has continued to expand its market share, both by focussingon and further developing third party referral relationships and by theacquisition of Thomas Charles, announced on 3 July 2006. Thomas Charles was established in August 2004 to act as an intermediary betweenits clients (the debtors) and insolvency practitioners. Its focus is thepackaging of IVAs for insolvency practitioners. Historically Thomas Charles has referred 40 completed cases per month to anetwork of independent Insolvency Practitioners, which has recently increased to70. Accuma will now receive 40 of these cases until an exclusive arrangementcommences in October 2006 when this will increase to 70 cases per month. Analyst Briefing An analyst briefing given by Charles Howson, Chief Executive of Accuma, toexplain the acquisition strategy in more detail will be held on Friday, 28 July2006 at 9.30 am at the offices of Abchurch, 100 Cannon Street, London, EC4N 7EU.If you would like to attend, please contact Chris Lane on 0207 398 7708 orLouise Thornhill on 0113 203 1345. One-on-one meetings or telephone briefingscan also be arranged today, Thursday, 28 July 2006 or Friday, 28 July 2006 ifrequired. - ends - For further information:Accuma Group plcCharles Howson, Chief Executive Tel: +44 (0) 161 751 6787charles.howson@accumagroup.com www.accumagroup.com Daniel Stewart & Co.Lindsay Mair/Marc Young / Tom Jenkins Tel: +44 (0) 20 7776 6550marc.young@danielstewart.co.uk Media enquiries:AbchurchChris Lane/ Louise Thornhill Tel: +44 (0) 20 7398 7700chris.lane@abchurch-group.com www.abchurch-group.com This information is provided by RNS The company news service from the London Stock Exchange