Acquisition of Edgewater Associates Limited


 

TIDMMFX 
 
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 GBP361,543 on turnover of 
GBP996,722 and had at that date net assets of GBP264,689. 
 
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 GBP2 million, payable as to GBP1 million in 
cash and GBP1 million in new ordinary shares ("Consideration Shares") in the 
Group. The initial consideration payable on completion is GBP525,000 in cash and 
GBP475,000 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: GBP158,000 in cash and GBP175,000 payable in Consideration 
Shares; 
31 December 2011: GBP158,000 in cash and GBP175,000 payable in Consideration 
Shares, and 
31 December 2012: GBP159,000 in cash and GBP175,000 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 GBP400,000, 
GBP450,000 and GBP500,000 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: 01624 694694 
 
Beaumont Cornish Limited 
 
Roland Cornish 
Tel: 0207 628 3396 
 
Britton Financial PR 
 
Tim Blackstone 
Tel 07957 140416 
 
This information is provided by RNS 
            The company news service from the London Stock Exchange 
   END 
 
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