FIRST DAY OF DEALINGS ANNOUNCEMENT Elephant Loans & Mortgages plc is pleased to announce the admission and first day of dealing of its shares on the Alternative Investment Market (AIM) of the London Stock Exchange. Shares will commence trading today under the ticker of "ELEP". Highlights: Elephant Loans & Mortgages plc is a packager of secured mortgages and loans within the non-conforming market sector. The Company received applications in excess of the number of shares available under the placing of new shares ahead of its AIM Admission. 21,666,665 new Ordinary Shares have been issued at 3 pence per share. This represents a total of 10.34% of the issued share capital of the company immediately following the placing, equating to £650,000 gross proceeds. The proceeds are to be used to fund the opening of further branch offices and various marketing activities. Admission and Placing Statistics Placing price - 3p Enlarged share capital immediately following Admission - 209,609,729 Market capitalisation at the Placing Price immediately following Admission - £6,288,292 For further information: Elephant Loans & Mortgages plc David Gammond, Executive Chairman Tel: +44 (0) 20 8892 2777 ARM Corporate Finance Limited Nick Harriss Tel: +44 (0) 20 7512 0191 nick.harriss@armcf.com www.armcf.com SVS Securities plc Ian Callaway Tel: +44 (0) 20 7638 5600 i.callaway@svssecurities.com www.svssecurities.com Introduction: The Company's wholly owned subsidiary, Elephant Loans, is a cash generative, fast growing packager of secured loans and mortgages to the UK sub-prime market. This is a high growth, high margin sector, with the UK sub-prime market currently estimated to be in the region of 9.1 million people. In 2004 the sub- prime market equated to 14.1% of the total market and was worth approximately £41.2 billion. Research suggests that the sector may account for 20-25% of the entire secured loans market within 5 years. Elephant Loans has been trading for four years and turnover for the year ended 31 March 2005 was £1.57 million, an increase of over 32.0% on that achieved in the previous year. Following the first 5 months of trading in 2005 (April- August) Elephant Loans is showing a consolidated PBIT of £202,084. There are high barriers to entry in this sector. Two key barriers that Elephant Loans has overcome are developing strong contractual relationships with the lenders and complying with the new FSA requirements. The contractual arrangements that Elephant Loans has with its key lenders are for full packaging services. A packager acts as a high volume sales distribution channel for the lender. They solicit customers and perform most of the administration of the loan application process. In return, Elephant Loans receives a higher commission (in excess of double the commission rate) from the lender than would be received by a general mortgage broker. Packaging rights are only granted to a select number of companies, all of whom already place high volumes of loans with the lender. In comparison to the many thousands of firms providing general mortgage broking services, the Directors believe that less than 50 companies have full loan packaging rights. The limited number of companies that currently offer this service reflects the high level of trust placed with each packager by the lender as well as the stringent levels of due diligence undertaken by the lender before this trust can be given. While less difficult than developing relationships with the lenders, obtaining permission from the FSA, which is a recent requirement for those involved in the provision of mortgages, can be both a time-consuming and costly exercise. The FSA requires companies to adhere to a variety of rules and regulations as well as many ongoing compliance requirements. Both of these barriers, but particularly the former, are likely to limit the number of new competitors entering the market. Key Services - Secured loans Loans average £39,000 to the top end of the sub-prime market, all of whom are home owners. The typical APR for the average loan customer is 13.3%. - Mortgages Mortgages average £205,000. The typical APR for the average mortgage customer is 6.6%. - Insurance Where appropriate, Elephant Loans sells five year single premium policy Mortgage Payment Protection insurance as additional products to mortgage sales. More detailed information on the Company's services are provided on page 11. Key Differences to Competitors Elephant Loans has strong relationships with well placed suppliers including Money Partners Limited, Igroup Loans Limited (part of GE Money Home Lending Limited) and Kensington Mortgages Limited. Based on their published accounts, these companies are considered to be among the top lenders in the industry. Elephant Loans has a more personalised marketing plan that focuses on opening satellite offices in local areas. In the Directors' experience, this results in a higher applicant-to-customer conversion rate. Elephant Loans already operates three offices in Twickenham, Oldham and Darlington. The Oldham office opened in January 2005 and is already performing ahead of projections. The Darlington office opened in September 2005. This is the first phase of a planned expansion to achieve national coverage by opening additional offices across the country. Elephant Loans has already made a considerable investment, in the region of £65,000, in its computer systems and general infrastructure to allow for dynamic growth without further significant investment in this area. Elephant Loans runs more cost effective and carefully targeted marketing campaigns for each branch in comparison to its competitors' high cost blanket national coverage. Directors David Keith Gammond, aged 47, Chairman David assists with the strategic aspects of the Group's management and development. David is currently part time Managing Director of Sterling Property Finance, a company backed by Natwest Bank and high net worth individuals, specialising in short-term lending for commercial property transactions. He has significant broking / lending experience having previously been Chairman and Managing Director of Excel Securities plc from 1999-2002, a private equity financed short-term commercial property lending business backed by REIT Asset Management and a merchant banking syndicate led by Singer & Friedlander. Prior to Excel Securities, David co-founded Cheval Acceptances plc and spent 3 years as Director of Marketing. Cheval is still a major force in the short term secured loan market and was backed by a large consortium of investors and Bank Leumi (UK) Ltd. David also spent three years in stock brokering, arranging equity finance and mergers and acquisitions in what were the Unlisted Securities Market and the Third Market for Central Stockbrokers Limited and John Siddall & Son Limited. He began his career with 13 years in the computer industry, selling everything from the very first PCs to large computer systems used in science and the military. Gary Paul Miller-Cheevers, aged 45, Managing Director Gary is the Managing Director and founder of the business. The growth that has been achieved since the business began trading in 2001 is a direct result of Gary's knowledge and experience of the market and its customers, together with his drive and ambition to grow Elephant Loans into one of the main loan packagers in the industry. Prior to establishing the business that became Elephant Loans, Gary was founder of Mezzaninecorp Limited which focused on combining mortgage broking and locating mezzanine and bridging finance for property developers. This business is where Gary first started to incorporate sub-prime mortgages, which was a relatively new concept at the time. Mezzaninecorp was dissolved as it became superfluous after the Home Owners Finance Company was incorporated and began to undertake similar business. Prior to commencing self-employment he worked for Lloyds Abbey Life, where he was headhunted into the "High Achiever Branch" from Allied Dunbar. Gary began his career in the loan and mortgage market at Allied Dunbar in 1985, where he was consistently in the top three salespersons, out of a total of 5,000. Robert James Kelly, aged 58, Finance Director Robert has been a fellow of the Institute of Chartered Accountants in Ireland for the last 33 years. He previously spent five years working in practice with KPMG and two years in commerce helping to establish a sales, marketing and distribution organisation for a North American corporation. Having successfully achieved this, he was relocated to the UK to assist in the development of its UK subsidiary. Robert has considerable experience in working with start-up companies and in assisting in the management and commercial practices for SMEs. Donald William Hammond, aged 57 Non Executive Donald is an experienced businessman with wide private and public sector experience. He has a strong banking, corporate and general finance orientation and held a number of Chairmanships, Company Secretarial positions and Directorships. These include Chairman of the NHS TrusTECH® (2001 to present); Chairman of the Cheshire Community Healthcare Trust, NHS (2000-2002), Chairman of the Halton General Hospital NHS Trust (1992-2000) and Director of Henry Cooke Group, a corporate finance and banking company (1986-1990). He also spent time as a Local Councillor for London Borough of Ealing (1978-1986). Over the last 15 years, Donald has been actively involved as a Business Angel or advisor for privately controlled and small PLC businesses.