Presentation Transcript

1. RENOVO GROUP PLC – a new force in UK SME lending July 2013
2. Disclaimer IMPORTANT NOTICE This document has been derived from a prospectus (comprising a prospectus drawn up in accordance with the Prospectus Rules (as referred to in section 73A Financial Services and Markets Act 2000 and published by the Financial Conduct Authority) and an admission document drawn up in accordance with, and required to be issued pursuant to, rule 3 and rule 14 of the AIM Rules for Companies published by London Stock Exchange plc (the "London Stock Exchange") and is the sole responsibility of Renovo Group plc (the "Company"). Altium Capital Limited, which is authorised and regulated by the Financial Conduct Authority, is acting as the nominated adviser to the Company. Panmure Gordon (UK) Limited, which is authorised and regulated by the Financial Conduct Authority, is acting as the broker to the Company. This document comprises a presentation which has been prepared in connection with the proposed acquisition by the Company of the entire issued and to be issued share capital of Ultimate Finance Group plc (the "Target") to be effected by way of a scheme of arrangement under Part 26 of the Companies Act 2006, part of the consideration for which is the issue and allotment by the Company of new ordinary shares in the capital of the Company to the shareholders of the Target ("Consideration Shares"), and the proposed application for the re-admission and admission (as the case may be) (together "Admission") of the entire issued, and to be issued, share capital of the Company and the Consideration Shares to trading on AIM ("AIM"), a market operated by the London Stock Exchange. The information in this presentation has not been verified by Altium Capital Limited nor does this presentation purport to contain all of the information that an investor may desire to have in order to evaluate whether or not to make an investment in the Company. The information in this presentation is subject to updating, completion, revision, verification and amendment. In particular, this document refers to certain events as having occurred which have not occurred at the date it is made available but which are expected to occur prior to publication of the prospectus in its final form. This presentation and its contents are confidential and are only directed at persons that (1) the Company reasonably believes are within the meaning of a kind described in article 19 (Investment professionals), article 48 (Certified high net worth individuals), article 49 (High net worth companies), article 50 (Sophisticated investors) and article 50A (Self-certified sophisticated investors) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 or (2) who are otherwise permitted by law to receive it, (all such persons together being referred to as "relevant persons"). This presentation and its contents are directed only at relevant persons and any investment or investment activity to which this presentation relates is only available to such relevant persons. Persons of any other description, including those who do not have professional experience in matters relating to investments, should not rely on this presentation or act upon its contents. This presentation is being supplied to you solely for your information and may not be copied, reproduced, further distributed to any person or published, in whole or in part, for any purpose. Any other person who receives this presentation should not rely or act upon it. By accepting this presentation the recipient represents and warrants that it/he/she is a person who falls within the above description of a relevant person who is entitled to receive this presentation. The information contained in this presentation is confidential and the property of the Company. The information contained in, and communicated to you during, this presentation does not constitute, or form part of, any offer to sell or issue, or any solicitation of an offer to purchase or subscribe for any shares in the Company nor shall this presentation, or any part of it, or the fact of its distribution, form the basis of, or be relied on, in connection with any contract. No reliance may be placed for any purpose whatsoever on the information contained in this presentation or on the completeness, accuracy or fairness thereof. No undertaking, representation, warranty or other assurance, express or implied, is made or given by or on behalf of the Company or Altium Capital Limited, or any of their respective directors, officers, partners, employees, agents or advisers or any other person as to the accuracy or completeness of the information or opinions contained in this document and no responsibility or liability is accepted by any of them for any such information or opinions. Notwithstanding the aforesaid, nothing in this paragraph shall exclude liability for any undertaking, representation, warranty or other assurance made fraudulently. This presentation should not be distributed, published, reproduced or otherwise made available in whole or in part or disclosed by recipients to any other person and, in particular, should not be distributed to persons with addresses in Australia, Canada, Japan, the Republic of Ireland, the Republic of South Africa or the United States of America or in any other country outside the United Kingdom where such distribution may lead to a breach of any law or regulatory requirements. Strictly Private & Confidential
3. OVERVIEW SME lending market represents an exciting opportunity SMEs are a major contributor to UK economic growth, employing 14.1 million people Lack of availability of finance Multiple schemes and calls for change Access to debt finance significantly harder than prior to the credit crunch Certain funders have reduced or withdrawn support for SME market Requirement for larger clearing houses to de-risk balance sheets Government data indicates that almost three times as many SMEs have been unable to find finance during the credit crunch compared to obtaining finance in 2007/2008 Renovo plans to build a large, well funded, customer friendly business The acquisition of UFG by way of a scheme of arrangement (the “Acquisition”), adds an SME asset book of c.£40 million and over 850 customers Focus will be on developing credit analysis and marketing, scalable infrastructure and broad product offering Grow organically and through acquisition The Acquisition has been unanimously recommended by the Renovo Board and the UFG Board Strictly Private & Confidential
4. BACKGROUND TO ULTIMATE FINANCE GROUP UFG provides bespoke invoice discounting, factoring, trade finance, asset finance facilities and debtor protection to clients ranging from well established small firms to medium sized businesses UFG operates from Bristol (its Head Office), Manchester, London, Lutterworth and Norwich Service underpinned by an IT infrastructure which provides clients with online access to their account information in real time UFG grew strongly in the period 2002 to 2006 with more subdued growth in the latter half of 2007 and 2008 and through the challenging years of the global recession. The business has since traded well against continued tough economic conditions In October 2010, UFG acquired Ashley Commercial Finance, which significantly increased the scale of the business, margins and profitability and broadened the Company's target market Since 2011, the business has begun to grow strongly once more and following the appointment of Jeremy Coombes as CEO in December 2011, and has implemented an active uplift in its marketing activity and introduced a range of new and innovative products including trade finance and asset finance in order to be a full Asset Based Lender to SMEs UFG lends its own funds (c.£6.9m at 31 December 2012) and is also able to utilise two back-to-back funding agreements with Lloyds TSB Commercial Finance Ltd (LTSB) to advance up to a further £34 million until July 2015 (as at 31 January, headroom on this facility was £5.4m) As well as deploying its own funds, the Trade Finance division has an additional funding line and the Asset Finance division has back-to-back financing facilities with a number of reputable providers Strictly Private & Confidential
5. OPERATIONS AND PRINCIPAL ACTIVITIES: UFG UFG targets SME businesses with straightforward products or services. UFG’s key services include: Invoice discounting advance clients up to 85% of their approved, unpaid invoices client remains responsible for their ledger and credit control Factoring advance clients up to 85% of their approved, unpaid invoices also includes credit control and/or sales ledger management service Recruitment finance cash advance on unpaid invoices with operational back office enhancements Asset finance assists SMEs to spread the cost of buying business assets through hire purchase Trade finance bridges the gap in payment for the import and export of goods via Purchase Finance and Supply Chain Finance Ashley Commercial Finance a leading UK independent small business invoice finance provider, with a broader offering reaching SMEs of a smaller size to UFG’s traditional client base Ashley Business Cash a funding solution for retailers, providing a cash advance on future sales where the advance is paid back at variable amounts linked to monthly sales Construction Finance a funding solution for the construction industry, launched on 1 January 2013 Strictly Private & Confidential
6. THE OPPORTUNITY FOR THE ENLARGED GROUP The board of Renovo sees an opportunity to build, by organic growth and acquisition, a new and trusted brand in SME lending, acquiring a loyal customer base and deploying capital at competitive rates via a range of distribution channels As at December 2012 there are c.£16.7 billion of outstanding loan advances to UK SMEs SMEs have traditionally found credit difficult to access from the major clearing banks that often focus on the security and stability of retail and larger corporate lending UFG adds an SME asset book of c.£40m and over 850 customers and provides a credible platform from which to grow a meaningful SME lending business The Renovo Board will support UFG in its growth plans Providing the security of a principally cash backed balance sheet and continuing to innovate the business model through a more technology focused platform The Renovo Board will continue to evaluate further acquisitions and alternative routes to access funding for SMEs at commercial rates which are accretive to the strategy; examples of the latter include but are not limited to Investment Programme from BIS to encourage lending to SMEs Strictly Private & Confidential
7. The Acquisition Strictly Private & Confidential
8. THE OFFER Recommended acquisition of the entire issued and to be issued share capital of UFG (other than the UFG Shares already held by Renovo) to be effected by means of a scheme of arrangement between UFG and its shareholders  Under the terms of the Acquisition, UFG Shareholders will receive: For each UFG Share: 6 pence in cash and 1.05 New Renovo Shares Based on the Closing Price of 18.75 pence per Renovo Share on 16th July 2013 being the last business day prior to the announcement that UFG had received an approach from Renovo, the Acquisition price represents a premium of approximately 4.8% to the Closing Price of an UFG Share of 24.5 pence on 16th July 2013, being the last business day prior to the announcement that UFG had received an approach from Renovo Based on the net asset value per Renovo Share of 19.1p disclosed in Renovo’s interim results for the six months ended 31 March 2013, the Acquisition price represents a premium of approximately 6.3%to the Closing Price of an UFG Share of 24.5 pence on 16th July 2013, being the last business day prior to the commencement of the Offer Period UFG Shareholders (other than Restricted Overseas Shareholders) may elect to vary the proportions of New Renovo Shares and Cash Consideration they receive in respect of their UFG Shares under the Mix and Match Facility: for every 1 New Renovo Share, 20 pence in cash; or for each 20 pence in cash, 1 New Renovo Share Assuming that a maximum number of 69,573,536 New Renovo Shares are issued pursuant to the Acquisition, UFG Shareholders will hold New Renovo Shares representing approximately 31.7% of the Enlarged Renovo’s share capital immediately following the Effective Date (excluding shares held in treasury) Upon the Scheme becoming effective, UFG will become a wholly owned subsidiary of Renovo Strictly Private & Confidential
9. CONDITIONS AND UNDERTAKINGS The Acquisition is conditional on, amongst other things, the approval of Renovo Shareholders and UFG Shareholders Irrevocable undertakings: The UFG Directors who hold UFG Shares have entered into irrevocable undertakings to vote (or procure the vote) in favour of the Scheme at the Court Meeting and the Special Resolution at the General Meeting in respect of their beneficial interests in UFG Shares amounting, in aggregate, to 9,584,741 UFG Shares, representing 12.8% of the existing issued share capital of UFG. All of these undertakings remain binding, even in the event of a higher competing offer for UFG, unless the Scheme lapses or is withdrawn. The UFG Directors have also made elections to receive additional Cash Consideration or New Renovo Shares under the Mix and Match Facility as follows: *Jeremy Coombes will exercise options granted under the UFG Share Scheme over 200,000 UFG Shares pursuant to the Scheme **Shane Horsell will exercise options granted under the UFG Share Scheme over 135,000 UFG Shares pursuant to the Scheme The Acquisition constitutes a reverse takeover for Renovo under the AIM Rules, therefore approval from Renovo shareholders will be sought at the Renovo General Meeting Renovo will publish a Prospectus in connection with the New Renovo Shares to be issued in connection with the Acquisition (incorporating, amongst other things, notice of the Renovo General Meeting), a copy of which will accompany the Scheme Document Strictly Private & Confidential
10. SUMMARY OF EXPECTED TIMETABLE OF PRINCIPAL EVENTS Strictly Private & Confidential
11. APPENDIX Strictly Private & Confidential
12. EXPERIENCED TEAM WITH A STRONG TRACK RECORD Proposed board of directors of the Enlarged Group Jamie Brooke (42) (current Chairman of Renovo; would remain as Chairman) Joined the Renovo Board on 30 June 2011 Investment manager at Henderson Global Investors Limited, which is a 35.7 per cent. shareholder in Renovo Director of Lochard Energy Group plc, a company admitted to trading on AIM Matt Cooper (46) (Non Executive Director of UFG; to become Deputy Chairman) Previously responsible for Capital One’s strategic direction and day to day operations in Europe up to 2001 Holds several board level positions with companies in both the corporate and not-for-profit sectors Current directorships include Chairman of Octopus Capital plc, Exec. Chairman of Imaginatik plc, Non-exec. Director at LoQ Roger McDowell (58) (current Chairman of UFG; to become Senior Independent Director) Experienced director of 30 years’ standing Developed the Oliver Ashworth Group through dramatic growth, admission to the Official List and sale to Saint Gobain Currently holds Non-Exec. positions at several listed companies, chairmanships in both public and private equity backed businesses Currently chairman of Alkane Energy and Avingtrans plc and a Non-exec. Director of I S Solutions plc, Swallowfield plc, and Augean plc Jeremy Coombes (48) (Chief Executive Officer of UFG; to become an Executive Director) 25 years’ experience in operational and underwriting roles. Responsible for all aspects of the Group's success, with particular emphasis on increasing shareholder value, growing UFG securely, and ensuring the future of Ultimate as one of the leading independent ABL's in the UK. Specialist in operating strategy and risk control. Has held positions in the Factoring, Invoice Discounting, Merchant Finance, Taxation and International departments of NatWest, HSBC Invoice Finance, Bibby Line Group and NMB-Heller (now GE Capital). Co-founded and was Operations Director of Bibby Factors (Bristol) Limited David Blain (51) (current Chief Financial Officer of Renovo; to remain CFO) 18 years’ experience as FD and Co. Sec. of plcs Joined the Renovo Board in 2008 and is responsible for the finance function. David is a member of the Institute of Chartered Accountants of England and Wales Previous positions include Finance Director and Company Secretary at Drew Scientific Group plc and eg Solutions plc Trained as a chartered accountant at WT Walton & Son before serving nine years at PriceWaterhouseCoopers Strictly Private & Confidential