TIDMFKE
RNS Number : 2248M
Fiske PLC
27 July 2017
Fiske plc
Acquisition of Fieldings Investment Management Limited
and proposed Placing of 2,585,000 new Fiske Shares at 50 pence
each
and
General Meeting
For release at 7.00 am on 27 July 2017
Fiske has recently completed a significant investment in
modernising its IT systems and operations including the automation
of certain front and back office processes. These actions will
allow for additional portfolios to be added to its platform to
generate income with a minimal increase in costs. To benefit from
this Fiske is continuing its strategy of seeking new portfolio
managers with established client relationships and acquisitions of
similar businesses to increase its Assets Under Management
("AUM").
The Board of Fiske plc ("Fiske") is pleased to announce that a
conditional Sale and Purchase Agreement has been signed for the
acquisition of the whole of the issued share capital of Fieldings
Investment Management Limited. The Board of Fiske also announces
that arrangements are being made to raise GBP1,292,500 (approx.
GBP1.22m, net of expenses) by issuing 2,585,000 new ordinary shares
of Fiske at a price of 50p each. In aggregate it is intended that
3,100,000 New Fiske Shares will be issued on completion of the
Acquisition and Placing, representing approx. 37 per cent. of the
number of Existing Fiske Shares.
The foregoing are all subject to the passing of resolutions
relating to the allotment of shares and disapplication of statutory
pre-emption rights at a general meeting of Fiske and the admission
of the New Fiske Shares to trading on AIM. The General Meeting is
being convened for 14 August 2017 and the Admission of New Fiske
Shares to trading on AIM is expected to take place on 17 August
2017.
Irrevocable undertakings to vote in favour of the Resolutions
have been received in respect of 5,826,102 Existing Fiske Shares,
representing 69 per cent. of the votes capable of being cast at the
General Meeting, of which 4,961,462 are Fiske Shares in which the
Directors have a personal interest.
The Acquisition of Fieldings
Fieldings is a discretionary and advisory investment portfolio
management company with AUM of just under GBP165 million. Fiske has
AUM of approx. GBP550 million, giving the enlarged Group AUM of
approx. GBP715 million. Fieldings' turnover for the year to 30
September 2016 was GBP1,319,938 (2015 GBP1,297,267), its pre-tax
profit was GBP315,280 (2015 GBP335,781) and its net assets were
GBP2,070,785 (2015 GBP2,023,970). Substantially all the assets are
cash balances.
The consideration payable for Fieldings comprises an initial
payment of GBP2.3 million (subject to adjustment (i) to the extent
that net assets as at 31 July 2017 are more or less than GBP2.0m
and (ii) by 26.57p for every GBP1 of AUM above or below GBP165m as
at 31 July 2017) and three payments of deferred consideration
payable in the month following 12, 24 and 36 months following
completion. If the AUM at 31 July 2017 is GBP165m each deferred
consideration instalment will be a maximum of GBP261,333. This
amount will be adjusted by 23.14p for every GBP1 of AUM above or
below GBP165m as at 31 July 2017. The amount of each deferred
consideration instalment actually paid will be scaled down in
proportion to Fieldings' AUM on 31 July 2018, 2019 and 2020
respectively. Fieldings' AUM at 31 July 2020 will be used to
recalculate the first and second instalments and if (following such
calculation) a higher amount would have been paid, then the
difference between the amount already paid and the higher amount
will be paid at the time of the third instalment. The initial
consideration will be satisfied by the issue of 515,000 New Fiske
Shares and (subject to the adjustments (i) and (ii) above) GBP2.024
million in cash (subject to the adjustments referred to above).
Some 20% of the deferred consideration will be satisfied by the
issue of further Fiske Shares, save that Fiske may elect to pay
cash instead if the market price of a Fiske Share at the relevant
time is less than 45p.
The Sale and Purchase Agreement contains warranties and
indemnities from the directors of Fieldings and restrictive client
and other undertakings by all selling shareholders for three years
from completion.
Fieldings' personnel comprises seven portfolio managers, six of
whom will remain with Fieldings following the Acquisition, and two
administrators. The Chairman of Fieldings, Tony Pattison, will join
Fiske's management committee. Two of the portfolio managers (who
are both directors and one of whom, Robert Bourne, is the founder)
intend to retire during the deferred consideration period and have
already started handing over their clients to colleagues who will
remain with the business following the Acquisition. Fiske intends
to integrate the Fieldings team into the enlarged Fiske Group
whereby they will all work with Fiske's staff in the future as a
single team. In order to align the remuneration basis of the two
companies, certain Fieldings portfolio managers will be paid a
lower proportion of the income they generate than they are paid
currently, in compensation for which a bonus (the "Bonus Pool")
will be paid to them. The size of the Bonus Pool will be calculated
by reference to the income generated from the Fieldings Clients,
over the three years following completion. If the revenue derived
from Fieldings Clients is maintained at the current level and
commission currently paid by Fieldings Clients to third party
brokers is instead paid to Fiske, the Bonus Pool payments in
respect of each of the three years following completion would be
GBP100,000, GBP175,000 and GBP225,000 respectively.
Following the Acquisition, Fieldings will relocate to Fiske's
offices prior to the expiry of the lease of Fieldings' office in
November 2017. Following the integration of Fieldings' business,
Fiske expects to save a substantial proportion of Fieldings'
non-employment overhead, contributing to an enhancement in earnings
per Fiske share. The actual results will depend on future
performance.
The Placing
Fiske has received indications of support for the Placing, some
of which are firm commitments to subscribe, for 2,585,000 Placing
Shares at a price of 50p each, raising gross proceeds GBP1,292,500.
The estimated costs of the Placing amount to approx.GBP74,000,
leaving net proceeds of approx. GBP1,218,500. Part of the cash
raised will, together with Fiske's existing cash balances, be
applied to paying the cash consideration due to the vendors of
Fieldings and an estimated GBP91,000 for related stamp duty and
other costs.
At 30 June 2017 Fieldings held cash balances, which amount (net
of fees payable in relation to the sale to Fiske) to approx.
GBP1.94 million. The part of the initial consideration payable in
cash amounts to approx.GBP2.024 million (subject to certain
adjustments as described above), the net effect of the Acquisition
on the enlarged Fiske Group's cash balances after paying costs is
an outflow of approx. GBP0.18 million. The balance of the net
Placing proceeds is required to ensure that the enlarged Fiske
Group satisfies the FCA's capital adequacy requirements plus
reasonable headroom and will be held in cash or liquid
securities.
The total number of Fiske Shares in issue following the
Acquisition and Placing will be 11,560,205.
Certain Directors and current significant shareholders of Fiske
have indicated an intention to participate in the Placing. Further
details of the Placing and confirmed participation by the Directors
and current significant shareholders will be set out in the
announcement to be made on the closing of the bookbuild which is
expected to be made later today. A total of 3,100,000 New Fiske
Shares will be issued pursuant to the Placing and Acquisition.
Trading update - Fiske
Unaudited management accounts show investment management fees
for the financial year to 31 May 2017 of approx.GBP0.969m and
commission income of approx.GBP1.988m. The fee and commission
income of approx.GBP2.957m for the year to 31 May 2017 is up
approx. 17 per cent. compared to GBP2.535m for the year to 31 May
2016.
The Board expects the final results, before fair value
adjustments, to be close to break-even including dividend income
from the Company's investment in Euroclear in the second half of
the year. This represents a considerable improvement when compared
to substantial net losses for previous years while systems were
being upgraded to provide a scalable platform for future
growth.
No dividend will be paid until the deficit in distributable
reserves has been cleared by a return to profitability.
Comments
Clive Harrison, Chairman of Fiske said: "We look forward to
welcoming Fieldings' directors, and clients to Fiske. We have
invested heavily in establishing a platform for future growth, so I
am delighted that this acquisition gives our enlarged Group a
larger and wider client base with the prospect of the double
benefit of incremental revenue and cost savings."
Robert Bourne, Founder and Chairman of Fieldings said: "This
merger is very good news for our clients, employees and
shareholders. There is a good cultural fit with Fiske and we
already know a number of their people. Our investment managers will
continue to manage our clients' investments but they will be
supported by younger executives from Fiske."
For further information please contact:
James Harrison, Chief Executive of Fiske (Tel: 020 7448 4700)
Salmaan Khawaja / Harrison Clarke,
Grant Thornton UK LLP Fiske's Nominated Adviser (Tel: 020 7383 5100)
Robert Bourne, Chairman of Fieldings (Tel: 020 7600 0011)
Tom Van Oss, Financial Adviser to Fieldings (Tel: 0777 553 1500)
Definitions
The following definitions apply throughout this announcement
unless the context requires otherwise:
"Acquisition" the proposed acquisition of the whole of the
issued share capital of Fieldings by Fiske
"AIM" the AIM market operated by London Stock Exchange plc
"AIM Rules" the AIM Rules for Companies, as published by London
Stock Exchange plc
"AUM" Assets under management. References in this announcement
to Fieldings' AUM exclude approx. GBP15m held in in portfolios for
which a self employed portfolio manager, who will leave Fieldings
prior to completion of the Acquisition, is responsible
"Bonus Pool" the bonus pool to be established following the
Acquisition for certain employees of Fieldings described in this
announcement
"Completion" the completion of the Acquisition
"Consideration Shares" the 515,000 Fiske Shares to be issued as
part of the consideration due to Fieldings Shareholders and any new
Fiske Shares issued as part of the Deferred Consideration
"Deferred Consideration" consideration payable for Fieldings in
three instalments subject to adjustment by reference to the AUM
attributable to Fieldings Clients 12, 24 and 36 months following
the Acquisition
"Directors" or "Board" the directors of Fiske
"Existing Fiske Shares" Fiske Shares in issue at the date of this announcement
"FCA" the Financial Conduct Authority
"Fieldings" Fieldings Investment Management Limited
"Fieldings Client" clients of Fieldings and new clients
introduced to the Fiske Group by Fieldings' directors and
employees, but excluding, in relation to the non competition
covenants given by Fieldings Shareholders only, clients for whose
portfolios a self employed consultant was responsible
"Fieldings Shareholder" a shareholder of Fieldings
"Fiske" or "Company" Fiske plc
"Fiske Group" Fiske and its subsidiaries, which will include
Fieldings following Completion
"Fiske Shares" ordinary shares of 25p each in the capital of Fiske
"General Meeting" the general meeting of Fiske, to be convened for 14 August 2017
"Initial Consideration" the part of the consideration for
Fieldings which is payable at, or shortly after, Completion
"New Fiske Shares" the Placing Shares and the Consideration Shares
"Placing" the proposed placing of New Fiske Shares described in
this announcement
"Placing Price" 50p per Share
"Placing Shares" the 2,585,000 New Fiske Shares the subject of the Placing
"Sale and Purchase Agreement" the contract between Fiske and the
Fieldings Shareholders pursuant to which the Acquisition is
effected.
"Shareholders" the holders of Existing Fiske Shares
This information is provided by RNS
The company news service from the London Stock Exchange
END
ACQLQLLLDDFXBBE
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