THIS ANNOUNCEMENT AND THE INFORMATION CONTAINED HEREIN IS RESTRICTED AND IS NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN, INTO OR FROM THE UNITED STATES, AUSTRALIA, CANADA, JAPAN, SOUTH AFRICA OR ANY OTHER JURISDICTION IN WHICH SUCH RELEASE, PUBLICATION OR DISTRIBUTION WOULD BE UNLAWFUL.
1 July 2015
Orchard Funding Group PLC
("Orchard Funding Group", the "Company" or the "Group")
Admission and First Day of Dealings on AIM
Orchard Funding Group PLC, the finance company which specialises in insurance premium finance and the professional fee funding market, is pleased to announce its flotation today on the London Stock Exchange's AIM market. This follows a successful placing by Panmure Gordon (UK) Limited (the "Nominated Adviser and Broker") raising £10.0 million before expenses (the "Placing") at a price of 96 pence per ordinary share (the "Placing Price").
Trading of the Company's ordinary shares commenced at 8.00 a.m. today on the AIM market of the London Stock Exchange ("Admission"), under the ticker symbol "ORCH". Market capitalisation of Orchard Funding Group at the Placing Price immediately following Admission is £20.5 million.
Chief Executive Officer, Ravi Takhar, said, "Orchard Funding Group is delighted to be joining AIM. The new capital raised will enable the business to grow to its full potential and become a leading lender in the insurance premium finance and professions finance market."
Orchard Funding Group
· Orchard Funding Group, through its wholly-owned subsidiaries Bexhill UK Limited ("Bexhill") and Orchard Funding Limited ("Orchard"), is a finance company which specialises in the insurance premium finance and the professional fee funding market.
· The Group lent £45.6 million in the 12 months to 31 July 2014 and £24.0 million in the six months to 31 January 2015.
· The Group provides finance to clients of insurance brokers to spread the cost of their insurance premiums and to clients of professional firms in order to spread the costs of their professional fees, typically over 10 months.
Funding Guaranteed by Introducing Firms
· All finance provided by Orchard Funding Group is guaranteed by the introducing professional firm or insurance broker, therefore ensuring the high quality of the Group's lending book
· The high quality of the Group's lending book is demonstrated by zero arrears or losses on the lending book of the Group over the last seven years.
· The Group has trading agreements with over 100 insurance brokers and 400 accountants and, as at 31 January 2015, the Group's debtor book comprised approximately 3,000 borrowers.
Attractive Markets
· There are over 3,800 insurance broker firms in the UK regulated by the Financial Conduct Authority. Based on figures extrapolated from the largest lenders in the insurance premium finance market, the Directors estimate that the insurance premium finance market is currently worth over £8.5 billion and over the next five years it is expected by management to grow to over £11.6 billion per year.
· There are over 37,000 accountancy firms in the UK according to data published by the Annual Survey of the Office of National Statistics. There are over 300,000 members of the seven UK accountancy bodies according to the Financial Reporting Council. The Directors estimate that the working capital requirements of the accountancy profession are over £3 billion per year.
Competitive Advantages
· The Group understands the needs and requirements of smaller insurance brokers and professional firms and offers a fully tailored service to the smaller end of the market.
· Senior management of the Group are involved in all aspects of the business and in particular maintain close and strong relationships with the Group's clients. The personal involvement of senior management in the needs and concerns of the Group's client base is very important to the clients of the Group. The Group has always regarded itself as an SME and is therefore sympathetic to the needs and aspirations of insurance brokers and professional firms, many of which are themselves SMEs.
Financial Track Record
· On an unaudited aggregated basis, in the 12 months to 31 July 2014, the Group generated revenue of approximately £3.0 million and operating profit of approximately £1.0 million.
· The Group's professional lending book was £7.4 million and insurance lending book was £11.5 million as at 31 January 2015.
· The Group is cash generative and intends to adopt a progressive dividend policy.
Reasons for Admission and Use of Proceeds
· The Directors believe that the Admission and Placing will be an important step in the Group's development and assist the Group in its development by:
· Increasing the capital base of the business to enable increased lending at reduced funding costs.
· Demonstrating an improved capital base to raise new and more cost effective financing from third party debt providers.
· Enhancing the Group's attractiveness as a financing counterparty to larger insurance brokers and accountancy practices.
· The net proceeds of the Placing of approximately £8.7 million are intended to be used to provide capital for lending to its clients.
Dividend Strategy
· It is the Directors' intention to implement a progressive dividend policy with an initial pay-out ratio of approximately 40 per cent. of profit after tax subject to the discretion of the Board and subject to the Group having appropriate distributable reserves. The first dividend payment will be in respect of the first half of 2016.
For further information please contact
Orchard Funding Group PLC +44 (0)1582 635 507
Ravi Takhar, Chief Executive Officer
Panmure Gordon Limited (Nomad and Broker) +44 (0)20 7886 2500
Dominic Morley (Corporate Finance)
Adam James (Corporate Finance)
Alina Vaskina (Corporate Finance)
Charles Leigh-Pemberton (Corporate Broking)
Novella Communications +44 (0)20 3151 7008
Tim Robertson
Ben Heath
For Investor Relations please go to: www.orchardfundinggroupplc.com
Directors' Biographies
At the date of Admission, the Board of the Company will be:
David Andrew Clark - Independent Non-executive Chairman (age 50)
Currently, Mr David Clark serves as an independent non-executive director of Constellation Health Technology plc, an AIM listed company, where he is also a member of Audit and Compensation committees. Prior to that, Mr Clark was a fund manager for 25 years and began his career with six years at Scottish Mutual as a senior investment analyst before joining Ignis Asset Management (formerly Resolution) where he worked from 1994 until September 2014. At Ignis he was responsible for the UK Smaller Companies quoted investments across all sectors. His performance resulted in him being ranked number two Fund Manager in the UK (2009) across all sectors by Citywire. Mr Clark graduated from Glasgow University with a Bachelor of Accountancy Degree and also holds an MSc in Investment Analysis from Stirling.
Rabinder ("Ravi") Singh Takhar - Chief Executive Officer (age 50)
Mr Ravi Takhar has over 25 years' experience in the acquisition, growth, financing and disposal of financial businesses. Mr Takhar founded the business in 2002 and has led the growth of the UK business to its current size. Prior to creating the Group, Ravi was an investment banker and Head of Financial Services investment at Nikko, the Japanese investment bank, from 1998 to 2002 as well as Chairman of Mortgages PLC, the mortgage lender. Mr Takhar was also Head of Mortgage Principal Finance at Investec Bank PLC from 2005 to 2008. He qualified as a banking solicitor at Clifford Chance, a leading international law firm, and has an MA from the University of Oxford.
William ("Liam") Leo McShane - Part-time Chief Financial Officer (age 57)
Mr Liam McShane has over 25 years' experience as a chartered certified accountant and is responsible for all internal accounting and treasury management, as well as all monthly and audited accounting for the Group. He has worked as an independent auditor to Bexhill UK Limited since 2002, as a Partner at McShane Wright Chartered Certified Accountants. Prior to McShane Wright, Mr McShane became a Partner at Clifford Roberts in 1998, having qualified as a chartered certified accountant with Towers Rockall, a local accountancy practise in Northamptonshire, in 1994. From 1989 he advised for the Institute of Independent Insurance Brokers, an association for professional insurance intermediaries, providing tax and financial advice to the Institute, its members and professional advisers to its members. Mr McShane is a Fellow of the Association of Chartered Certified Accountants.
Jonathan Paul David Shearman - Independent Non-executive Director (age 44)
Currently, Mr Jonathan Shearman is an independent non-executive director, member of Audit Committee and Chairman of Remuneration Committee at Trifast Plc, a company listed on the Main Market of the London Stock Exchange. Mr Shearman has over 20 years' experience of public equity markets having started his career in equity research at James Capel in 1993, before working in equity sales at Williams de Broë and KBC Peel Hunt from 1995 to 2006. He worked as an equity analyst at Gartmore Investment Management from 2006 to 2008 followed by a role as strategic consultant to Altium Group (a pan European Investment Bank) from 2009-2012. Mr Shearman has been an independent non-executive director of Trifast Plc since 2009 and also currently acts as a consultant to a leading fund management company.
IMPORTANT NOTICE
This announcement is for information purposes only and does not constitute an admission document, nor does it constitute or form part of any offer or invitation to sell or issue, or any solicitation of any offer to purchase or subscribe for, any securities in the capital of the Company, nor shall it (or any part of it), or the fact of its distribution, form the basis of, or be relied on in connection with or act as any inducement to enter into, any contract or commitment whatsoever relating to any securities.
Panmure Gordon (UK) Limited is regulated by the Financial Conduct Authority and is acting exclusively for the Company and no one else in connection with the Placing and Admission and will not regard any other person (whether or not a recipient of this announcement) as a client in relation to the Placing or Admission and will not be responsible to anyone other than the Company for providing the protections afforded to its clients or for providing advice in relation to the Placing, Admission or any transaction, arrangements or other matters referred to in this announcement.
This announcement is not for publication or distribution, in whole or in part, directly or indirectly, in or into the United States, Canada, Australia, the Republic of South Africa, Japan or any other jurisdiction where to do so would constitute a violation of the relevant laws of such jurisdiction. The Placing and the distribution of this announcement may be restricted by law in certain jurisdictions and persons into whose possession this announcement, or other information referred to herein, comes should inform themselves about and observe any such restriction. Any failure to comply with these restrictions may constitute a violation of the securities laws of any such jurisdiction.
The securities referred to herein may not be offered or sold, directly or indirectly, in the United States unless registered under the US Securities Act of 1933, as amended (the "US Securities Act") or offered in a transaction exempt from, or not subject to, the registration requirements of the US Securities Act. The offer and sale of securities referred to herein has not been and will not be registered under the US Securities Act or under the applicable securities laws of Australia, Canada, the Republic of South Africa or Japan. There will be no public offer of the securities referred to herein in the United States, Australia, Canada, the Republic of South Africa or Japan. Subject to certain exceptions, the securities referred to herein may not be offered or sold in Australia, Canada, the Republic of South Africa or Japan or to, or for the account or benefit of, any national, resident or citizen of Australia, Canada, the Republic of South Africa or Japan.
No reliance may or should be placed by any person for any purpose whatsoever on the information contained in this announcement or on its completeness, accuracy or fairness. The information in this announcement is subject to change. Investments to which this announcement relates may expose an investor to a significant risk of losing all of the amount invested. This announcement does not constitute a recommendation concerning the Placing. The value of shares can decrease as well as increase. Potential investors should consult a professional advisor as to the suitability of the Placing for the person concerned.
Forward Looking Statements
Certain statements contained within the announcement are forward looking statements and are based on current expectations, estimates and projections about the potential returns of the Group and industry and markets in which the Group operates, the Directors' beliefs and assumptions made by the Directors. Words such as "expects", "anticipates", "should", "intends", "plans", "believes", "seeks", "estimates", "projects", "pipeline" "aims", "may", "targets", "would", "could" and variations of such words and similar expressions are intended to identify such forward looking statements and expectations. These statements are not guarantees of future performance or the ability to identify and consummate investments and involve certain risks, uncertainties, outcomes of negotiations and due diligence and assumptions that are difficult to predict, qualify or quantify. Therefore, actual outcomes and results may differ materially from what is expressed in such forward looking statements or expectations. Among the factors that could cause actual results to differ materially are: the general economic climate, competition, interest rate levels, loss of key personnel, the result of legal and commercial due diligence, the availability of financing on acceptable terms and changes in the legal or regulatory environment.
These forward-looking statements speak only as of the date of this announcement. The Company expressly disclaims any obligation or undertaking to disseminate any updates or revisions to any forward-looking statements contained herein to reflect any change in the Group's expectations with regard thereto, any new information or any change in events, conditions or circumstances on which any such statements are based, unless required to do so by applicable law or any appropriate regulatory authority.
