TIDMMAB1
RNS Number : 5817C
Mortgage Advice Bureau(Holdings)PLC
18 June 2019
The information contained within this announcement is deemed to
constitute inside information as stipulated under the Market Abuse
Regulations (EU) No. 596/2014. Upon the publication of this
announcement, this inside information is now considered to be in
the public domain.
18 June 2019
MORTGAGE ADVICE BUREAU (HOLDINGS) PLC
("MAB" or the "Group")
Acquisition of 80% interest in First Mortgage Direct Limited
Mortgage Advice Bureau (Holdings) PLC (AIM: MAB1.L) is pleased
to announce that it has agreed to acquire 80 per cent. of the
entire issued share capital of First Mortgage Direct Limited(1)
("First Mortgage" or the "Business") for an initial cash
consideration of GBP16.5m (the "Acquisition"), valuing the Business
at GBP20.6m. The Acquisition is expected to be significantly
earnings accretive in the first full year following completion and
thereafter.
(1) First Mortgage has one trading subsidiary, Property Law
Centre Limited, which is wholly owned.
First Mortgage
First Mortgage is one of the UK's leading omni-channel,
independent mortgage brokers, with a particularly strong presence
in Scotland, where the Business was originally established over two
decades ago. The Scottish based business now comprises over 90
highly productive employed mortgage and protection advisers and has
already commenced its expansion south of the border. Customers can
access mortgage advice at its head office premises in Edinburgh,
through one of its 14 mortgage shops, as well as remotely over the
telephone, a channel through which First Mortgage has driven
significant growth over the last few years. First Mortgage is one
of the very strongest and most forward-thinking businesses in the
UK mortgage intermediary market, with customers' current and future
needs both integral to its strategy.
Under the direction of its highly regarded management team,
First Mortgage has developed strong direct to consumer lead
generation expertise. The Business also now acquires over half of
its new customers via referrals from its existing customer base, as
well as having outstanding repeat business levels. Both factors
have driven its highly reputable brand presence which is
substantiated by very impressive customer reviews.
First Mortgage is highly regarded in the new homes market in
Scotland, making it complementary to MAB which also holds a
significant presence in this sector more widely across the UK.
First Mortgage is a 'client fee' free model, with a strong track
record, whose pace of growth has increased over recent years. Like
MAB, First Mortgage focuses on ensuring that it meets customers'
protection needs and approximately half of its revenues are derived
from protection products, hence driving strong margins. In 2018,
First Mortgage arranged c. GBP2 billion in mortgage lending for its
customers. In the nine months ended 31 December 2018(2) , First
Mortgage achieved revenue of GBP10.2m and profit before tax of
GBP1.5m. The net assets of the Business as at 31 December 2018 were
GBP2.9m, with cash balances of GBP3.5m. The Business has not
declared a dividend since 31 December 2018.
(2) First Mortgage has prepared accounts for the nine months to
31 December 2018, following First Mortgage changing its accounting
reference date from 31 March to 31 December, to align with MAB's
accounting reference date.
Acquisition rationale
The Directors believe that the Acquisition presents MAB with
significant additional growth opportunities. The Acquisition will
enable MAB to further grow its adviser numbers and market share, in
addition to its core growth plans, and will also add another highly
respected and leading mortgage broker to the Group. First
Mortgage's omni-channel growth strategy, and particularly its
telephony strategy, will be leveraged further through the planned
deployment and rollout of MAB's new technology, building on the
expertise in both businesses and enabling the acceleration of the
respective businesses' ambitious growth plans.
The Acquisition is expected to be significantly earnings
accretive in the first full year of ownership and thereafter.
Acquisition consideration
MAB has agreed to acquire 80% of the entire issued share capital
of First Mortgage Direct Limited from Ian Robert McGrail (Managing
Director) and his father Robert Lawrence McGrail (Director) (the
"Vendors"), for a cash consideration of GBP16.5m. Ian Robert
McGrail and Robert Lawrence McGrail respectively own 50% each of
the Business. Ian Robert McGrail will retain a 20% shareholding in
First Mortgage and remain in the Business in his current role and
Robert Lawrence McGrail will be divesting in full and leaving the
Business. MAB will fund the cash consideration from a mix of its
own cash resources and a partial drawdown on its new debt
facilities (described below).
MAB has also entered into an option agreement with Ian McGrail
(structured as a put and call option), to acquire the remaining 20%
of the entire issued share capital of First Mortgage from Ian
McGrail between 2024 and 2030, at a valuation for the Business of
eight times the prior year's audited profit before tax, adjusted
for distributable reserves and regulatory capital requirements, for
a minimum of GBP4m and up to a maximum total consideration of
GBP10m. Under the terms of the option agreement, MAB can, at its
discretion, satisfy up to 75% of the consideration through the
issue of new ordinary shares in MAB. Any new ordinary shares issued
to satisfy this consideration will be subject to orderly market
provisions.
Completion of the Acquisition is expected to occur on 1(st) July
2019.
New debt facilities and dividend implications
MAB has entered into an agreement with NatWest in respect of a
new revolving credit facility for GBP12m. It is MAB's intention to
repay the drawn down proportion of this debt facility as quickly as
practicable. MAB's practise over recent years has been to pay out
approximately 90 per cent. of its profit after tax as dividends. In
order to repay the drawn down facility, MAB will reduce its
dividend payout on the enlarged Group from 90 per cent. to 75 per
cent. This will be effective from MAB's final dividend payable in
respect of the year ended 31 December 2019.
Commenting on the Acquisition, Ben Thompson, Managing Director,
said:
"This acquisition is central and complementary to our strategic
objective to grow our market share of new mortgage lending. First
Mortgage is a highly reputable, forward thinking business of
significant scale with a clear strategy to deliver further strong
year on year growth. This enables us to pursue at pace our aim to
accelerate Group growth through excelling in areas of
specialisation, and in particular, building on our omni-channel
choice for customers. This approach best positions MAB to benefit
in an evolving intermediary sector. MAB's new technology
developments will further strengthen our capability and ambition in
this regard.
I am delighted that Ian has chosen to work with us, to help us
both to really accelerate our respective growth plans and am
excited at the prospect of making this highly successful and
enjoyable for both teams."
For further information please contact:
Mortgage Advice Bureau (Holdings) Plc Tel: +44 (0) 1332 525007
Peter Brodnicki - Chief Executive Officer
Ben Thompson - Managing Director
David Preece - Chief Operating Officer
Lucy Tilley - Finance Director
Numis Securities Limited (NOMAD and Broker) Tel: +44 (0)20 7260 1000
Stephen Westgate / Hugo Rubinstein (Corporate
Finance)
Michael Burke (Corporate Broking)
Media Enquiries:
investorrelations@mab.org.uk
The person arranging release of this Announcement
on behalf of the Group is Lucy Tilley, Finance
Director.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
ACQLIFIRRSITLIA
(END) Dow Jones Newswires
June 18, 2019 02:05 ET (06:05 GMT)
Mortgage Advice Bureau (... (LSE:MAB1)
Graphique Historique de l'Action
De Juin 2024 à Juil 2024
Mortgage Advice Bureau (... (LSE:MAB1)
Graphique Historique de l'Action
De Juil 2023 à Juil 2024