TIDMPCF
RNS Number : 2055D
PCF Group PLC
08 October 2018
8 October 2018
PCF Group plc
("PCF", the "Company" or the "Group")
PCF to Acquire Azule, a UK Market Leader in the Provision of
Specialist Funding and Leasing Services to the Broadcast and Media
Industry
In line with the Company's strategy to grow both organically and
by acquisition, PCF is pleased to announce that its wholly-owned
subsidiary, PCF Bank Limited, has agreed to acquire the entire
issued share capital of Azule Limited ("Azule") for a total
consideration of up to GBP5.6 million (the "Acquisition").
Azule is a UK market leader in providing specialist funding and
leasing services to individuals and businesses in the broadcast and
media industry. Azule also operates in the audio visual and
photography markets and offers its services across Europe, as well
as in the UK. Azule has been providing finance in broadcasting,
media, audio visual and other related industries for more than 20
years and it has built a strong market presence, with a sales
capability to place asset finance to a wide range of banks and
lending institutions, as well as originating asset finance for
their own portfolio.
The Acquisition offers revenue synergies with the Company's
existing asset finance operations, given Azule's focus on a niche
class of business-critical assets with strong collateral
characteristics and lending to prime credit grade customers. For
the year ended 30 June 2018, Azule originated GBP54.3 million of
asset finance, reported revenues of GBP3.1 million, a profit before
tax of GBP0.8 million and the gross assets were GBP17.9 million.
The Acquisition will immediately enhance Group earnings.
The Acquisition provides for an initial consideration of
c.GBP4.1 million, of which c.GBP3.3 million will be settled in
cash. The balance of the initial consideration will be satisfied by
PCF issuing 1,923,076 new ordinary shares of 5 pence each
("Consideration Shares") at 39 pence per share, representing an
aggregate value of approximately GBP0.8 million, to the Azule
management team. The Consideration Shares are subject to a lock-up
period of two years, with orderly market conditions attached after
this period. An additional earn-out is payable in the form of two
deferred cash consideration payments totalling up to GBP1.5m over a
period of two years. The earn-out provisions are dependent on
pre-agreed performance criteria. In addition, the directors of
Azule have entered into service agreements with the Company for
fixed periods of up to 42 months.
The initial cash consideration will be funded by the Company's
existing cash and capital resources and the issue of the
Consideration Shares is within the authorities granted to the
Company at the Annual General Meeting held on 2 March 2018.
The Acquisition is subject to FCA approval for change of
control, which is expected shortly. The Company will apply for
admission of 1,923,076 Consideration Shares to trading on AIM
following FCA approval for change of control. Following admission
of the Consideration Shares, the Company's issued share capital
will consist of 214,152,601 ordinary shares.
Acquisition highlights
-- Strong vendor relationships with leading broadcast and media equipment manufacturers
-- A team of 17 sales and finance professionals
-- A capability to originate over GBP50 million of asset finance
per annum, with excellent growth potential
-- A history of strong profitability with most recent annual
profits being GBP0.8 million and a return on equity of 27%
-- A GBP16 million portfolio of receivables, with an exceptionally low impairment charge
-- Immediate funding synergies with PCF Bank's access to lower cost retail deposits
-- Leasehold offices located in Datchet, Berkshire
-- The effective date of the Acquisition will be 30 September 2018
Strategic fit
-- A new asset class within PCF's existing asset finance market
-- A new route to market through direct vendor channels
-- Potential of a European distribution channel for vendor relationships
-- Synergies with existing infrastructure, expertise and finance products
-- Experienced team in-situ
-- Meaningful contribution to the Company's target GBP750 million portfolio by September 2022
-- Meets target key performance criteria for return on equity and profitability
-- Management and business are a good cultural fit
The Company will announce a full year trading update on the
earlier of the FCA approval of the Acquisition or 22 October
2018.
Scott Maybury, Chief Executive of PCF, commented:
"Our acquisition strategy is focused on the diversification of
both our asset classes and routes to market. Azule ticks both boxes
and is immediately earnings enhancing.
"The acquisition of Azule is a clear demonstration of the mutual
advantages offered by the acquisition of an established asset
finance business by PCF. As part of PCF Bank, Azule will be able to
access a lower cost of funds enhancing profitability, enabling
faster growth and accelerating PCF's achievement of portfolio
growth targets.
"We are very pleased to welcome Azule to the Group - they are an
impressive team and will contribute significantly to PCF."
Peter Savage, Chief Executive of Azule Limited, commented:
"We are delighted to become a part of PCF. Azule has been a very
successful business to date and the advantages we gain as part of a
larger group will propel the business into its next phase of
growth."
- end -
For further information, please contact:
PCF Group plc Tel: +44 (0) 20 7222
Scott Maybury, Chief Executive Officer 2426
Robert Murray, Managing Director
David Bull, Finance Director
Tavistock Communications Tel: +44 (0) 20 7920
Jos Simson / Simon Hudson / Edward Lee 3150
Panmure Gordon (UK) Limited Tel: +44 (0) 20 7886
Atholl Tweedie - Corporate Finance 2500
Charles Leigh-Pemberton - Corporate Broking
Stockdale Securities Tel: +44 (0) 20 7601
Robert Finlay / Richard Johnson - Corporate 6100
Finance
Henry Willcocks - Corporate Broking
Note
This announcement contains inside information for the purposes
of Article 7 of Regulation (EU) No 596/2014.
About PCF Group plc (www.pcf.bank)
Established in 1994, PCF Group plc is the AIM-quoted parent of
the specialist bank, PCF Bank Limited. With the advent of a banking
operation, the Group has the capability to increase its lending
portfolio significantly, with target portfolio sizes of GBP350
million in 2020 and GBP750 million in 2022. The Group will retain
its focus on portfolio quality and has the capability to lend
increasingly to prime segments of its existing finance markets. The
Group will also seek to diversify its lending products and asset
classes through acquisition.
PCF Bank currently offers retail savings products for
individuals and then deploys those funds through its two lending
divisions:
-- Consumer Finance which provides finance for motor vehicles to consumers; and
-- Business Finance which provides finance for vehicles, plant and equipment to SMEs.
The Group has a track record of strong financial performance and
an efficient and scalable business model, with significant room to
grow. Utilising its technologically advanced platform, the Bank
provides both depositors and borrowers with a high level of service
and a straightforward, simple range of products tailored to suit
their needs.
For media enquiries please contact media@pcf.bank
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END
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