Acquisition of Additional Interest in Beer Swaps

FOR IMMEDIATE RELEASE                                                                                                   2 March 2020

Manx Financial Group PLC (the "Group")

Acquisition of an Additional Shareholding in Beer Swaps Limited

In 2018, Conister Bank Limited, a wholly owned subsidiary of Manx Financial Group PLC, acquired 20% of the issued capital of Beer Swaps Limited ("BSL"), trading as Ninkasi Brewkit Rentals. BSL, formed in 2015 and based in Ledbury, provides equipment finance and rental products to UK based craft and micro-breweries.  

The agreement entered into with BSL in 2018 included an option to acquire the remaining shares by April 2021. The Group now announces that Conister Bank Limited ("Conister"), a wholly-owned subsidiary, intends to acquire further shares in BSL to increase its ordinary shareholding to 75% for a cash consideration of approximately £0.5 million (the "Transaction"). Further, Conister will simplify the capital structure of BSL by repaying all director loans, being £0.1 million and all issued preference shares, being £0.2 million, as part of the Transaction. For the year ended 31 March 2019, BSL reported turnover of £0.4 million and a profit before tax of £0.1 million with net assets of £0.2 million.

The Transaction has been approved by the Isle of Man Financial Services Authority.

This further acquisition strengthens Conister's strategy of developing a network of niche loan brokers within the UK. BSL has developed an impressive customer base within the brewing industry with a considerable potential for further expansion by offering flexible hire and equipment purchase terms.

The independent Directors (being all the Directors with the exception of James Mellon and Denham Eke), have carefully considered the most suitable method of securing the Regulatory Capital required by Conister, both to maintain and continue the excellent growth, and to take advantage of further acquisition and lending opportunities. Although Conister enjoys high levels of liquidity from customers' deposits, this liquidity must be underpinned by its own separate capital on the basis of a ratio as directed under the Isle of Man banking licence. As a result, and having considered other methods of raising capital, the independent Directors have resolved, following negotiation, to accept on standard commercial terms, a £1.0 million loan for five years to 26 February 2025, with a coupon of 5.4% and no conversion rights, from Burnbrae Limited ("Burnbrae"), a party connected with Jim Mellon and Denham Eke (the "Burnbrae Loan"). In addition, the independent directors have negotiated a further renewal of the £1.25 million convertible loan note from James Mellon for five years to 26 February 2025 at a reduced interest rate of 5.4%, down from the previous 6.5%. All other terms remain as those announced on 2 March 2010 (the "Mellon Loan"). The independent directors (being all directors other than John Banks) have also approved the extension for a further two months to 26 April 2020 of a convertible loan note of £460,000 at an interest rate of 6.5%, held by Southern Rock Insurance Company Limited ("SRICL"), due for repayment on 26 February 2020. All other terms remain as those announced on 2 March 2010 ("SRICL Loan").

AIM Rule 13

Due to James Mellon and Denham Eke both being directors of Burnbrae, the provision of the Mellon Loan and the Burnbrae Loan are Related Party Transactions under the AIM Rules. Accordingly, the independent Directors for this, being Greg Bailey, John Banks, Alan Clarke, David Gibson and Douglas Grant, consider, after consulting the Group's Nominated Adviser, that the terms of the Burnbrae Loan and Mellon Loan are fair and reasonable insofar as the Group's shareholders are concerned. Due to John Banks being a director of SRICL, the extension of the SRICL Loan is a Related Party Transaction under AIM Rules. Accordingly, the independent Directors for this, being Jim Mellon, Greg Bailey, Alan Clarke, Denham Eke, David Gibson and Douglas Grant, consider, after consulting the Group's Nominated Adviser, that the terms of the SRICL Loan are fair and reasonable insofar as the Group's shareholders are concerned.

This announcement contains inside information for the purposes of Article 7 of EU Regulation No. 596/2014 on market abuse. Upon the publication of this announcement via a Regulatory Information Service, this inside information is now considered to be in the public domain.

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ENDS