Acquisition in UK
Date: 29-01-2002
Source: IFG
IFG Group plc ("IFG") is pleased to announce that its subsidiary IFG Holdings Limited has acquired the entire issued share capital of IPS Pensions Limited ("IPS").
IPS is being acquired from a number of vendors, who are the senior employees in the business. The initial consideration is Stg£11.43 million (€18.68 million) comprising the issue of Stg£10.8 million (€17.65 million) Loan Notes on Completion and the payment of Stg£0.63 million (€1.03 million) in cash on 6 April 2004. Further consideration of up to Stg£4 million (€6.54 million) is payable in the event that the profits for the two years ending 30 September 2003 achieve certain agreed thresholds. The aggregate maximum consideration payable is Stg£15.43 million (€25.22 million).
Background to and reasons for the acquisition
IPS is a holding company based in Bristol in the UK, whose wholly owned trading subsidiary IPS Actuarial Services Limited ("IPS Actuarial") is engaged in providing actuarial services, employee benefit consultancy and pension scheme administration.
The main thrust of IFG’s acquisition policy to date has been to acquire and develop niche financial services businesses with significant recurring income. The activities of IPS are complementary to the financial services presently being provided by the IFG Group and provides the opportunity to increase both the current actuarial and financial services business of IPS and IFG’s existing UK financial services business.
Financial information on IPS
IPS’s income arises from the provision of pension administration and actuarial services. The following information has been extracted from the combined audited accounts of IPS and IPS Actuarial:-
| Year ended 30 September | |||
| 2001 Stg£’000 |
2000 Stg£’000 |
1999 Stg£’000 |
|
| Turnover | 3,009 | 2,763 | 2,525 |
| Profit on ordinary activities before taxation | 1,575 | 1,367 | 1,177 |
| Net assets being acquired amount to Stg£852,234 (€1,392,994) | |||
Terms of the acquisition
The initial consideration is Stg£11,430,000 (€18,682,576), satisfied in two tranches. Further consideration of up to Stg£4,000,000 (€6,538,084) may be payable in the event that the aggregate profits for the two years ending 30 September 2003 achieve certain agreed thresholds. The aggregate maximum consideration payable is Stg£15,430,000 (€25,220,660).
(a) The first tranche of initial consideration is Stg£10,800,000 (€17,652,828) and will be satisfied on Completion by the issue of two year Bank Guaranteed Loan Notes. They will not bear any interest and will be redeemable on the second anniversary of the date of issue.
(b) The second tranche of the initial consideration of Stg£630,000 (€1,029,748) will be payable in cash on 6 April 2004 or, if later, within 28 days of the profits before tax of IPS for the financial year ended 30 September 2003 having been determined. Such payment is not dependent on IPS profits.
(c) Further consideration for the Acquisition, which it is intended would be funded out of retained earnings of the Group, may be payable in cash up to Stg£4,000,000 (€6,538,084). Such consideration will be payable on 6 April 2004 or, if later, within 28 days of the profits before tax of IPS for the financial year ended 30 September 2003 having been determined. This consideration shall be calculated based on the profits before tax of IPS for the two year period ending 30 September 2003 ("the Aggregate Profits") as follows:-
if the Aggregate Profits are
(i) less than Stg£3,000,000 no additional consideration is payable;
(ii) greater than or equal to Stg£3,000,001 but not greater than Stg£3,250,000 a sum is payable up a maximum of Stg£500,000 equal to twice the amount by which such Aggregate Profits exceed Stg£3,000,000;
(iii) greater than or equal to Stg£3,250,001 a sum is payable up a maximum of Stg£4,000,000 equal to the amount of such Aggregate Profits.
The Acquisition Agreement contains warranties and indemnities in favour of IFG in relation to the accounts of IPS and IPS Actuarial for the year ended 30 September 2001, IPS’s general financial position, its contracts and employees and regulatory compliance. The obligations of the Purchaser under the Acquisition Agreement are guaranteed by IFG.
Following Completion, David Saunderson, chief executive of IFG’s UK Operations, will join the Board of IPS as Chairman.
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