BullsEye Insights

BullsEye: Daily London AIM RNS Round-Up

Wednesday 24 June 2020


Here is our summary of the day's hottest RNS alerts from across London's Alternative Investments Market (AIM).


Avacta Group (AVCT.LSE)

Update on COVID-19 Test Development Partnership

Avacta Group plc, the developer of Affimer® biotherapeutics and reagents announced that the first Affimer-based rapid test strips to detect SARS-COV-2 spike protein have been developed and evaluated by Avacta's partners at Cytiva (formerly GE Healthcare Life Sciences) and show positive initial performance data.

In mid-May Avacta provided Affimer reagents that are specific to the SARS-COV-2 spike protein to Cytiva which has now developed the first lateral flow test strips using these reagents and generated initial performance data using coronavirus spike protein.

These data show that the test strips detect the spike protein in model samples at concentrations within the clinical range found in saliva of patients with COVID-19. Work continues now to refine the test strip design, optimise its performance and get the best detection limit possible in order to generate the highest sensitivity in the final rapid test product.

Following the optimisation of the lateral flow test by Cytiva the design will then be transferred to manufacturing partners in the UK that are currently being put in place by Avacta. The Company is working with these manufacturers to compress the normal manufacturing, clinical validation and regulatory timelines in order to bring a product to market as quickly as possible.


For the full RNS, see: https://www.investegate.co.uk/avacta-group-plc--avct-/rns/update-on-covid-19-test-development-partnership/202006240700058569Q/

Union Jack Oil (UJO.LSE)

Further Interest Acquired in PEDL 253 Biscathorpe

Union Jack Oil plc, a UK focused onshore hydrocarbon production, development and exploration company iannounced the acquisition of a further 3% of PEDL253 containing the Biscathorpe project and the signing of a legally binding and confidential settlement agreement between Egdon Resources U.K. Limited (acting on behalf of the joint venture partners) and Humber Oil & Gas Limited.  


Union Jack advises that the joint parties to PEDL253 have resolved the dispute arising under the Joint Operating Agreement and look forward to co-operating in the future in the development of the licence.


Union Jack is pleased to also announce that it has entered into a Sale and Purchase Agreement with Montrose Industries Limited to purchase a further 3% interest in PEDL253 which following the implementation of the terms of the Settlement Agreement, increases the Company`s economic interest to 30%.  The consideration for the additional interest is £115,000 which will be paid from the Company`s existing cash resource.

Upon completion of the Montrose acquisition and implementation of the Settlement Agreement, the interests held in PEDL253 will be as follows:

  • Egdon Resources U.K. Limited (Operator)  35.8%

  • Union Jack Oil plc  30.0%

  • Montrose Industries Limited   19.2%

  • Humber Oil & Gas Limited  15.0%

For full RNS details, see: https://www.investegate.co.uk/union-jack-oil-plc--ujo-/rns/further-interest-acquired-in-pedl-253-biscathorpe/202006240700058400Q/

Brooks Macdonald Group (BRK.LSE)

Acquisition of Lloyds Bank International's Channel Islands wealth management and funds business

Brooks Macdonald Group plc announced that its wholly owned subsidiary Brooks Macdonald Asset Management (International) Limited has entered into a binding agreement to acquire the Channel Islands wealth management and funds business of Lloyds Bank International Limited.

The total consideration is expected to be up to £9.63 million, including £2.5 million of regulatory capital, with initial consideration being up to £9.30 million.  The full consideration will be paid in cash from Brooks Macdonald's existing financial resources.  A contingent cash consideration of up to £0.33 million will be payable two years after completion depending upon the acquired business meeting certain pre-agreed performance targets relating to the retention of portfolio clients.  Completion is expected to take place in the fourth quarter of 2020 subject to regulatory approval.

The Acquisition consists of 100 per cent of the share capital of Lloyds Investment Fund Managers Limited and the investment management assets and investment management client relationships of the discretionary investment management clients of Lloyds Bank International Limited, which is a subsidiary of Lloyds Bank Corporate Markets plc.  LBIL and LIFML are both 100 per cent owned subsidiaries of Lloyds Holdings Jersey Limited whose ultimate parent is Lloyds Banking Group plc.

The Group is also pleased to announce that it has reached agreement in principle with LBCM on a reciprocal arrangement whereby the two parties will introduce relevant services to each other's clients.


Highlights


LBIL's wealth management and offshore funds business has a high quality investment offering with an affluent and high net worth client base and strong intermediary relationships, with Funds under Management ("FUM") of £1.0 billion1 all managed on a discretionary basis, comprising:

  • An investment management business with c.£500 million in FUM serving c.1,200 portfolio clients

  • A funds business with c.£500 million in FUM, predominantly distributed through c.50 independent financial advisers, and serving c.10,500 mainly personal clients.

The Acquisition has a compelling strategic rationale for the Group, in line with its strategy to consider selective high quality inorganic opportunities, alongside its continuing focus on organic growth from intermediary relationships.


It is a compelling move for Brooks Macdonald International which:

  • Further transforms the International business, building on its reinvigoration under Andrew Shepherd and his management team

  • Increases International FUM by up to two-thirds to c.£2.5 billion2, and brings up to c.1,200 private clients

  • Adds multi-asset and fixed income fund capability, augmenting International's proposition to clients, advisers and trustees

  • Strengthens the Group's international intermediary distribution reach.

Following completion, the combined business will be based at International's office in Jersey and the businesses being acquired will be rebranded as Brooks Macdonald International.  A number of current LBIL staff members will be offered roles in the combined business to expand and strengthen International's capability, ensuring continuity of customer service.


The Group intends to operate the business on a different model to that currently employed by Lloyds.  Brooks Macdonald will outsource fund administration and leverage its existing investment management strengths to bring that activity in-house.  The Company expects this change to the operating model to drive a material uplift in profitability.


Brooks Macdonald International and LBIL expect to build on the relationship developed through the Transaction to create a deeper ongoing business partnership:

  • Brooks Macdonald International will introduce clients where appropriate to Lloyds Bank International's banking services and LBIL will reciprocate, introducing banking clients to the Company's international investment management and financial planning services

  • International and LBIL will explore further opportunities for co-operation in product and service development.

Material financial benefits for the Group are expected from the Acquisition:

  • Increase in the Group's pro forma funds under management by up to c.8 per cent to over £13 billion2

  • Expected to be accretive to underlying EPS in the year of acquisition (12 months ending 30 June 2021), with full year accretion of an estimated 8-10 per cent in the Group's first financial year following completion (12 months ending 30 June 2022), based on achieving expected levels of client transfer, and before any potential revenue synergies

  • Consideration representing an estimated post restructuring P/E multiple of 4.5 times in the first full year following completion, on a pro forma basis

  • Acquisition funded from existing cash resources.


For full RNS details, see: https://www.investegate.co.uk/brooks-macdonald-grp--brk-/rns/acquisition/202006240700068606Q/

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