Kingsbridge Holdings PLC
2 April 2001
KINGSBRIDGE HOLDINGS PLC
£12m ACQUISITION OF STAFFORD GROUP PLC
PLACING AND OPEN OFFER TO RAISE UP TO £18.7m
NOTICE OF EXTRAORDINARY GENERAL MEETING
Kingsbridge Holdings Plc, ('Kingsbridge') a provider of financial services and
advice, focusing on sports and entertainment clients, announces the proposed
acquisition of Stafford Group plc ('Stafford') and a Placing & Open Offer.
* £12 million acquisition of Stafford Group plc and its principal trading
subsidiary, The Independent Financial Partnership Limited ('IFP'), a
leading independent financial adviser providing a range of financial
services and advice to clients
* Merger of complementary businesses strengthens services and
* Key management to join Enlarged Group
* Issue of up to 25,572,413 New Ordinary Shares of 1p each at a price of
73p per share via a Placing and Open Offer to raise up to £18.7 million
* The Open Offer will be on the basis of 1:5 for existing shareholders
* Martin Greenwood to be appointed Chief Executive of the Enlarged Group
* Interim results confirmed considerable progress made, growth
Charles Green, Chairman, commented:
'IFP, the trading subsidiary of Stafford, is a leading independent financial
adviser providing a range of financial services and advice to clients and
which fits Kingsbridge's acquisition criteria of having strong growth
potential in its chosen niche markets.
'Kingsbridge has made significant progress in the period since its flotation
on AIM on 19 July 2000. Its commercial and professional reputation as a
premier provider of financial services to its chosen markets has been enhanced
by its public status.
'The Directors believe that the acquisition will significantly strengthen the
Group's support systems and infrastructure and assist the Company in securing
its position of becoming a leading provider of independent financial advice.
'We anticipate further development of the business in the future through a
combination of organic growth within its existing business and further
acquisitions, where they meet the Group's stringent investment criteria.'
2 April 2001
Kingsbridge Holdings Plc Tel: 0115 852 3620
Charles Green Tel: 07767 238777
Eric Cater Tel: 07968 978630
The Independent Financial Partnership Limited Tel: 01423 523 311
Ross Hyett, Chief Executive
Teather & Greenwood Limited Tel: 020 7426 9000
College Hill Associates Tel: 020 7457 2020
Michael Padley / Nicholas Nelson
Teather & Greenwood Limited, which is regulated by the Securities and Futures
Authority Limited, is acting for Kingsbridge Holdings plc and no one else in
connection with the Placing and Open Offer and will not be responsible to
anyone other than Kingsbridge Holdings plc for providing the protections
afforded to customers of Teather & Greenwood.
This announcement has been approved by Teather & Greenwood for the purposes of
Section 57 of the Financial Services Act 1986.
Kingsbridge Holdings plc, the provider of financial services and advice to a
wide range of clients from the world of sport, announces that it has entered
into a conditional agreement to acquire the entire issued share capital of
Stafford Group plc, the holding company of The Independent Financial
Partnership Limited ('IFP').
The consideration for the Acquisition is £12 million to be satisfied by a
maximum of £10 million in cash and/or Loan Stock and £2 million by the issue
of the Consideration Shares, at the Placing Price, credited as fully paid. In
addition, deferred consideration of a maximum £2,500,000 will be payable,
partly in cash and/or Loan Stock and partly by the issue of Deferred
Consideration Shares, by reference to the future financial performance of IFP.
The Acquisition is classified, because of the size of Stafford in relation to
the size of the existing Group, as a reverse takeover for the purposes of the
AIM Rules. As a result, the Acquisition is conditional, inter alia, upon the
approval of Shareholders at the EGM and, as Stafford's main trading
subsidiary, IFP, is regulated by the PIA, approval by the PIA. In addition, as
Stafford is a public limited company, the Acquisition is conditional upon the
Vendors consenting to, and the Panel granting, a waiver of the Code in respect
of the Acquisition.
At the same time the Company, subject inter alia to Shareholders' approval,
proposes to raise up to approximately £17.0 million (net of expenses of the
Proposals) by way of a Placing and Open Offer of up to 25,572,413 New Ordinary
Shares at 73 pence per share. The proceeds from the Placing and Open Offer
will be used in part to fund the cash element of the consideration for the
Acquisition and to make provisions for the redemption of the Loan Stock. The
balance of the funds raised will be used to pay the expenses of the Proposals
and to implement the further expansion and development of the Enlarged Group.
A circular, which comprises a prospectus, has today been sent to shareholders
of Kingsbridge detailing the proposals relating to the Acquisition and the
Placing and Open Offer. Words, definitions and meanings in this announcement
have the same meaning as those contained within that circular.
The EGM of the Company is being convened for 11.00 a.m. on 27 April 2001 at
the offices of Hammond Suddards Edge, 7 Devonshire Square, Cutlers Gardens,
London EC2M 4YH, at which Shareholders will be asked to consider the
Resolutions necessary to approve and implement the Acquisition and the Placing
and the Open Offer.
Background to and reasons for the Acquisition
The Directors stated in the prospectus dated 12 July 2000 that it was their
intention to develop the Group as a specialised independent financial adviser
to the football industry and other sports related parallel markets through
organic growth and selective acquisitions. Since flotation on AIM the Company
has achieved organic growth by the expansion of its sporting client base and
growth by acquisition in its chosen sectors by the acquisition of Murray
Management Group in September 2000 and Maxdelta Limited in October 2000. IFP
is a leading independent financial adviser providing a range of financial
services and advice to clients and fits Kingsbridge's acquisition criteria of
having strong growth potential in its chosen niche markets.
The Directors believe that the Acquisition will significantly strengthen the
Group's support systems and infrastructure and assist the Company in securing
its position of becoming a leading provider of independent financial advice
and services in its chosen sectors. The Acquisition will enable the Group to
develop further its range of pension advisory and administration services to
its clients, an area in which the Directors believe there is significant
growth potential for the Group. Kingsbridge has been appointed as a
stakeholder pension adviser to the F.A. Premier League and the Football
The Directors believe that the Acquisition provides the platform for the
Enlarged Group to expand its existing client and product base and enables it
to provide an increased level of tailored financial services and advice to its
Information on Stafford
Stafford was incorporated on 21 December 1998 as Launchmove plc and changed
its name to Stafford Group plc on 21 January 1999. The principal activity of
Stafford is the holding Company of a group of companies providing a range of
Stafford has one principal trading subsidiary, IFP, which it acquired on 28
February 2000. IFP provides a range of financial services to both personal and
Information on IFP
The underlying business of IFP was originally formed by Ross Hyett in 1980 as
Analysis Investment and Management Services Limited, a company providing
financial advisory services to both individuals and companies. The holding
company, Analysis Group plc was acquired by the Independent Financial Group
plc in 1991. IFP was formed in June 1993 when the management and staff of IFG
Financial Services Limited, a subsidiary of the Independent Financial Group
plc, acquired the financial and advisory business. In November 1998 IFP
(London) was formed as a joint venture with Saffery Champness, owned 63.4 per
cent. by IFP and 36.6 per cent. by Saffery Champness, to provide financial
planning services to Saffery Champness' clients. IFP was acquired by Stafford
on 28 February 2000. The consideration comprised a mixture of cash and shares
and the IFP Vendors thereby acquired a substantial equity stake in Stafford.
Business and Prospects
IFP's principal business is the provision of independent financial advice and
planning to both personal and corporate clients primarily in the following
pension and tax planning;
investment and financial advice; and
pension scheme administration.
IFP provides a multi-discipline approach to providing financial advice and
services to its client base. The directors of IFP believe that its emphasis on
product development has been a significant factor in the successful
development of new areas of activity. The company has championed a holistic
financial planning approach with an increasing emphasis on fee income and
recurring commissions. For the year ended 31 December 2000 fees and recurring
income represented approximately 38 per cent. of IFP's turnover.
IFP sources its client base primarily from referrals from its existing client
base, connections with other professional advisers, seminar programmes
targeted at owner/managers of small to medium enterprises ('SME's') and
advertising campaigns in national newspapers.
The company currently employs a total of 82 staff in its three offices based
in Harrogate, London and Sunderland and operates through the following
Personal Wealth Management - the Personal Wealth Management Division offers
bespoke tax efficient investment planning and advice to clients through links
with other leading tax advisers in the UK. This division currently advises
almost 200 clients representing nearly £300 million of capital. The division
is developing an Internet access point for clients and expanding the provision
of tax planning services to clients through a wholly owned subsidiary of
Stafford, IFP Wealth Strategies Limited.
Group Employee Benefits - In 1997, IFP launched an Advanced Pensions
Administration Service intended to provide comprehensive and cost effective
occupational pension scheme administration and value added member support
services to SMEs. IFP currently provides the administration for 22 pension
schemes on behalf of its clients representing approximately 6,000 members. The
management of IFP believes that there is further growth potential in this
market as companies move to money purchase pension schemes from defined
benefit pension schemes with the administration of the schemes being separated
from the fund management function.
Financial Planning - The principal activity of this division is the provision
of advice on a range of financial plans and services to clients that are
designed to improve their income and sustain their capital growth. Lead
generation is through a nationwide advertising campaign centred on the Mail on
Sunday and the Daily Telegraph newspapers and current developments include the
creation of a complementary seminar based marketing campaign.
Support Services - the company has a high level of client retention and
believes that this owes much to the quality of advice given and on the high
level of support given to consultants and their clients. IFP has almost 4
support staff for every 1 consultant. Within this division, there are the
following specialist functions:
Technical - IFP has a technical support department consisting of ten staff,
including five qualified to the level of the Advanced Financial Planning
Certificate. This department provides a report writing service covering all
aspects of financial planning. It is also responsible for product and
investment fund research, publication of the 'Moneywise' newsletter to clients
and the Retired Investor's Guide. The department also contributed to the
writing of two books, 'Wealth Strategies for your Business' and 'How to
Finance Your Retirement' by Centenary Business Books.
Compliance - IFP is directly regulated by the PIA and has an integrated
compliance department of three qualified personnel. The department ensures
that the company's operations comply with internal compliance procedures and
provides a proactive training and competence function.
Financial Information on IFP
Year ended Year ended Year ended
31 December 31 December 31 December
2000 1999 1998
£'000 £'000 £'000
Turnover 5,040 3,836 4,035
Operating Proft/(Loss) 948 (185) 124
Profit/(Loss) on ordinary activities 967 (178) 123
At 31 December 2000, IFP had net assets of £912,725.
Further financial information on IFP is contained in the prospectus.
Stafford is managed by a board of directors who will resign on completion of
the Proposals. On completion of the Acquisition, Martin Greenwood will be
appointed as Chief Executive of the Enlarged Group and Ross Hyett will be
appointed to the Board as an Executive Director. On completion of the
Acquisition, David Wadsworth will be appointed as Finance Director Designate
and Company Secretary and it is anticipated that he will be appointed to the
Board in due course.
Principal terms of the acquisition
Pursuant to the Acquisition, Kingsbridge will acquire the entire issued share
capital of Stafford, which is the holding company of IFP. Prior to the
Acquisition, certain of the Vendors, Roger Looker and Timothy Seymour, have
agreed to purchase the entire issued share capital of Stafford Consulting.
Stafford Consulting is a wholly owned subsidiary of Stafford involved in
provision of corporate finance advice, which commenced business in February
2001. The consideration will be £50,001.
Pursuant to the Acquisition Agreement, Kingsbridge will receive warranties and
indemnities, including a deed of indemnity in respect of taxation, from
certain of the Vendors in relation to the business and assets of Stafford and
its subsidiaries including IFP.
The consideration payable for the Acquisition is as follows:
The initial consideration for the entire issued share capital of Stafford is £
12 million, payable as to a maximum of £10 million in cash and/or loan notes
and as to £2 million in Consideration Shares at the Placing Price. The
consideration paid to the IFP Vendors will include all of the Consideration
Shares and approximately £5 million in cash or Loan Stock within the £10
million referred to above.
Sums totalling £1.4 million are to be retained by Kingsbridge from the initial
consideration payable in respect of certain of the indemnities in the
Acquisition Agreement and pending the quantification and payment of the
outstanding deferred consideration owed by Stafford to the IFP Vendors as
Under the existing acquisition agreement between Stafford and the IFP Vendors,
deferred consideration is payable to the IFP Vendors contingent on IFP, which
for this purpose includes certain of its subsidiaries, achieving certain
profit before taxation targets in the year ended 31 December 2000 and the two
years ending 31 December 2002. IFP achieved the profit target for the year
ended 31 December 2000 and the relevant deferred consideration is due to be
paid by Stafford to the IFP Vendors prior to completion of the Acquisition.
Kingsbridge will assume the deferred consideration liability from Stafford
which is payable to the IFP Vendors for the two years ending 31 December 2002.
However, the terms of the existing deferred consideration agreement will be
varied and will become payable as follows:
1. An earn out will be payable on the Board approval of the audited accounts
of IFP for the year ending 31 December 2001 of a maximum of £2.25m payable by
40 per cent. in cash and/or Loan Stock and 60 per cent. in Deferred
Consideration Shares at the Placing Price.
The earn out will be conditional on IFP achieving audited profit before
taxation of £1.25m for the year ending 31 December 2001 (excluding certain
non-recurring adjustments). No further earn out will be payable on the
performance of IFP for the year ending 31 December 2002. If no payment is due
under this paragraph 1 for the year to 31 December 2001 because IFP's audited
profit before taxation is less than £1.25 million deferred consideration may
be payable under paragraph 2.
2. This alternative would involve a payment of a maximum of £2.5 million
payable 50 per cent. in cash and/or Loan Stock and 50 per cent. in Deferred
Consideration Shares at the average mid-market price of an Ordinary Share over
the preceding 5 days to the date of the Board approval of the audited accounts
of IFP for the year ending 31 December 2002. This alternative earn out formula
will be based on the average audited profit before taxation for the two years
ending 31 December 2002. The deferred consideration payable will be based on
the amount by which the average audited profit before taxation of IFP exceeds
IFP's audited profit before taxation for the year ended 31 December 2000
multiplied by 8.06. However if the average audited profit before taxation in
these two years, 2001 and 2002, is less than 110 per cent of IFP's audited
profit before taxation for the year ending 31 December 2000, no deferred
consideration will be payable under this paragraph 2.
Details of the Placing and Open Offer
The Company is proposing to raise up to approximately £17.0 million, net of
expenses, by way of the Placing and Open Offer of up to 25,572,413 New
Ordinary Shares at 73p each per share. Certain Directors have undertaken not
to take up 5,224,056 Offer Shares to which they are entitled under the Open
Offer and these together with the Placing Shares have been placed firm with
institutional and other investors.
Applications by Qualifying Shareholders will be satisfied in full up to their
pro rata basic entitlement, on the basis of:
1 Offer Share for every 5 Existing Ordinary Shares
held at the close of business on the Record Date. Fractional entitlements to
Offer Shares will be aggregated and fall to be allotted to placees under the
Placing. The Offer Shares are to be paid for in full on application. The
number of New Ordinary Shares which are issued under the Open Offer will
depend on the number of applications received from Qualifying Shareholders in
respect of the Offer Shares.
For those Qualifying Shareholders who do not hold their Existing Ordinary
Shares in the CREST settlement system or do not elect to have their Offer
Shares credited to their relevant CREST stock account, definitive certificates
in respect of the Offer Shares are expected to be despatched by 8 May 2001.
Delivery of share certificates by post will be at the risk of Shareholders.
For those Qualifying Shareholders who validly elect to hold their Offer Shares
in a CREST stock account, the relevant account will be credited on 30 April
2001. The Company reserves the right to satisfy applications for all Offer
Shares in certificated form.
Temporary documents of title will not be issued. Pending the issue of
definitive certificates for the New Ordinary Shares (other than in respect of
those shares held through CREST), transfers will be certified against the
Further details of the Open Offer and the terms and conditions on which it is
being made, including the procedure for acceptance and payment, are contained
in the prospectus and in the accompanying Application Form. To be valid,
Application Forms must be received by Lloyds TSB Registrars no later than 3.00
p.m. on 25 April 2001.
The Placing and Open Offer is conditional, inter alia, upon the passing of the
Resolutions to be proposed at the EGM, the Placing Deed becoming unconditional
and not having been terminated in accordance with its terms, and Admission.
The Open Offer is not being made to certain Overseas Shareholders.
The New Ordinary Shares will, when issued, rank pari passu in all respects
with Existing Ordinary Shares, including the right to receive all dividends
and other distributions thereafter declared, made or paid in relation to a
record date after their issue, and will be issued free of all liens, charges
and encumbrances. It is expected that Admission will become effective and
trading in the New Ordinary Shares will commence on 30 April 2001.
Ross Hyett, a Proposed Director, has committed to subscribe for 684,932 new
Ordinary Shares issued under the Placing. The subscription by Ross Hyett for
new Ordinary Shares issued under the Placing is regarded as a related party
transaction under the AIM Rules. In the opinion of the Directors, having
consulted with Teather & Greenwood, the subscription by Ross Hyett under the
Placing is fair and reasonable insofar as Shareholders are concerned.
Kingsbridge - current trading and prospects
The Group anticipates further development of its business in the future
through a combination of organic growth within its existing business and
further acquisitions, where they meet the Group's stringent investment
The Directors remain positive about the financial and long term trading
prospects for the Enlarged Group and they look forward to the future with
Financial Information on Kingsbridge
The following financial information has been extracted from the interim
results contained in the prospectus, where further financial information on
Kingsbridge can be found.
28 February 2001
Gross Profit 1,990
Profit on ordinary activities 399
At 28 February 2001, Kingsbridge had net assets of £6,883,786.
The Directors, who have been so advised by Teather & Greenwood, consider that
the terms of the Proposals are fair and reasonable so far as Shareholders are
concerned and are in the best interests of the Company and Shareholders as a
whole. In providing advice to the Directors, Teather & Greenwood has taken
into account the Directors' commercial assessment of the Proposals.
Accordingly, the Directors unanimously recommend Shareholders to vote in
favour of the Resolutions to be proposed at the Extraordinary General Meeting,
as they intend to do so in respect of their own beneficial holdings of
26,440,280 Ordinary Shares representing approximately 43.8 per cent. of the
Company's issued ordinary share capital.
Extraordinary General Meeting
An Extraordinary General Meeting of the Company has been convened for 11.00
a.m. on 27 April 2001. At the meeting Shareholders will be asked to consider
the following Resolutions, which will be proposed as follows:
1) to approve the Acquisition; and
2(a) to increase the authorised share capital of the Company;
2(b) to grant authority to allot the New Ordinary Shares and to make further
2(c) to disapply the pre-emption provisions of section 89 of the Companies Act
Following the proposed increase in authorised share capital, the issue of New
Ordinary Shares pursuant to the Placing and Open Offer and taking account of
the Existing Ordinary Shares, there will remain unissued and unreserved
31,325,792 Ordinary Shares representing approximately 35.3 per cent. of the
increased issued Ordinary Share capital of the Company (assuming full
subscription). Save for the issue of the New Ordinary Shares, the Board has no
present intention of issuing any Ordinary Shares (other than under the Share
Option Schemes) and no such issue which would effectively change control of
the Company will be made within one year of the date of this document without
prior approval of Shareholders in general meeting.
TIMETABLE OF PRINCIPAL EVENTS
Record Date for Open Offer close of business on 28
Latest time and date for splitting 3.00 p.m. on 23 April
(to satisfy bona fide market claims only)
Latest time and date for receipt of Form of Proxy 11.00 a.m. on 25 April
Latest time and date for receipt of Application 3.00 p.m. on 25 April
and payment under the Open Offer
Extraordinary General Meeting 11.00 a.m. on 27 April
Dealings commence in the New Ordinary Shares on 8.00 a.m. on 30 April
CREST member accounts credited 30 April
Despatch of definitive share certificates for 8 May
New Ordinary Shares by
Proposals connected with the Placing and Open Offer will be put to
Shareholders at an EGM to be held at 11.00 a.m. 27 April 2001 and a Prospectus
and Application Form will be sent to Shareholders later today.
The Application Form, which is personal to shareholder(s) named thereon may
not be assigned or transferred (except to satisfy bona fide market claims) and
represents a right to subscribe for their entitlement to new ordinary shares.
The Application Form is not a negotiable document or a document of title and
cannot be traded.
Teather & Greenwood Limited, which is regulated by the Securities and Futures
Authority Limited is acting for Kingsbridge and no-one else in connection with
the Placing and Open Offer and accordingly will not be responsible to anyone
other than Kingsbridge for providing the protections afforded to customers of
Teather & Greenwood Limited or for giving advice in relation to the Placing
and Open Offer.