Arbuthnot Regulatory News (ARBB)

PRESS RELEASE

For immediate release

Date: 15 January 2013

Arbuthnot Banking Group PLC announces acquisition of Debt Managers

Arbuthnot Banking Group PLC ("ABG") is pleased to announce that its 70.7 per cent owned subsidiary, Secure Trust Bank PLC ("STB") has today acquired the businesses of Debt Managers Holdings Ltd, Debt Managers (AB) Limited and Debt Managers Limited (together "Debt Managers" or the "Business"). Debt Managers collects delinquent debt on behalf of a range of clients including banks and utility companies and is based in Rotherham with 76 staff in total. STB has recruited Nick Shepherd, the ex CEO of Close Credit Management Limited to run this business. Nick has a long and successful track record in this sector having been with Close Credit Management Limited for 14 years.

Key benefits of this acquisition to STB include:

• Broadening the income base of STB without the requirement for large amounts of capital;

• The acquisition of a scalable collections platform through which STB intends to channel its delinquent debt; and

• The acquisition of the latest call centre and collections technology, including market leading dialler capability, IVR technology and payment websites.

STB has acquired Debt Managers for an initial cash payment of £364,000 paid on completion of the transaction which includes payment for the estimated book value of the net assets of £14,000. In addition deferred consideration of up to £400,000 in cash is payable by STB one year after completion subject in part to the Business achieving certain income criteria. The assets acquired are expected to be fair valued at circa £0.76 million after completion.

STB has acquired Debt Managers from its founders, Mr Hugh and Mrs Moira Love, who will retire from the Business. 

Debt Managers generated an unaudited loss before tax of £0.1 million under UK GAAP for the year ended 31 August 2012. No material differences are anticipated under IFRS. The acquisition is initially expected to be earnings neutral 

The initial cash consideration has been funded from STB's existing cash resources and the additional regulatory capital requirements arising as a result of this acquisition are expected to be minimal. No regulatory approvals were required in relation to the transaction which completed today. STB has also funded the repayment of Debt Managers' outstanding overdraft of approximately £1.7 million.

Paul Lynam, Chief Executive Officer of Secure Trust Bank PLC, said:

"We are pleased to welcome the staff and clients of Debt Managers into the Secure Trust Bank group. We are delighted to have recruited Nick Shepherd, ex CEO of Close Credit Management Limited, to run this long established business and to leverage the latent potential of the modern and scalable operating platform. We expect the new management to grow the business organically as many larger banks and finance companies deleverage and refocus. We also expect this acquisition to make a meaningful contribution to the financial results of STB over a three to five year horizon. This is consistent with our on-going strategy of growing both lending and fee based income streams within the Secure Trust Bank group" 

-ENDS-

Enquiries:

Arbuthnot Banking Group PLC Tel: 020 7012 2400

Henry Angest, Chief Executive and Chairman

Andrew Salmon, Group Chief Operating Officer

James Cobb, Group Finance Director

David Marshall, Director of Communications

Canaccord Genuity Hawkpoint Limited (Nominated Adviser) Tel: 020 7665 4500

Lawrence Guthrie

Sunil Duggal

Numis Securities Limited (Broker) Tel: 020 7260 1000

Chris Wilkinson

Mark Lander

Pelham Bell Pottinger Tel: 020 7861 3232

Ben Woodford

Dan de Belder