Acquisition
November 15 2007 - 2:02AM
UK Regulatory
RNS Number:7701H
Eleco PLC
15 November 2007
For immediate release 15 November 2007
Eleco plc
Statement on current trading and prospects; acquisition of Milbury Systems
Limited ("Milbury") and its related freehold manufacturing facility for an
aggregate #7,065,000, of which #75,000 will be performance related, and vendor
placing of 3,000,000 Ordinary Shares of Eleco plc ("Eleco") at 101p per share.
Eleco (ELCO.L), the building systems and construction software group, will hold
its Annual General Meeting ("AGM") at 12 noon today. At the AGM John Ketteley,
Executive Chairman, will say that turnover and profit of both the building
systems and software businesses were substantially higher in the first quarter
than at the same time last year and that the outlook for the major part of its
business is buoyant. A separate AGM statement has been released today and is
contained in full later in this announcement.
Eleco plc is also pleased to announce the #7,065m acquisition of Milbury part
financed by a #3.03m vendor placing with Delta Lloyd Asset Management N.V.*.
A summary of key points of the acquisition follows :
Information on Milbury
* Founded in 1978 with operations near Bristol and in Lydney,
Gloucestershire, Milbury produces pre-cast and pre-stressed concrete
products and provides a comprehensive design, manufacture and installation
service to its clients.
* Milbury is an established provider of environmental control products for
flood prevention and storage tanks in steel and concrete for the water and
waste management industries.
* Milbury is also a supplier of security solutions including underground
parking, fire walls, security and blast walls.
* Turnover for the nine months ended 30 September 2007 was #6.8m with
adjusted EBIT of #0.9m and net assets of #1.9m.
Rationale
* Complementary to the retaining wall and terracing operations of Eleco's
subsidiary, Bell & Webster Concrete.
* Strategic geographical location for Eleco's concrete business enabling it
to expand into areas where Milbury's lower transportation costs could be
advantageous.
* Milbury's agricultural products complement the retaining walls business of
Bell & Webster Concrete.
John Ketteley, Executive Chairman of Eleco, commented:
"We are delighted to announce the acquisition of Milbury Systems which has a
recent record of good profits growth and which, we believe, will enable us to
accelerate the expansion of our existing concrete business. It will also give us
the opportunity to target different areas in the market.
Eleco has had a strong start to the year with overall trading significantly
ahead of the same period last year. We look forward to the challenges of the
year ahead with confidence."
For further information please contact:
Eleco plc Tel: 01920 443 830
John Ketteley, Executive Chairman http://www.elecoplc.com
john.ketteley@eleco.com
David Dannhauser, Finance Director
david.dannhauser@eleco.com
Collins Stewart Europe Limited 020 7523 8350
Nick Ellis / Philip Roe
Buchanan Communications 020 7466 5000
Tim Anderson / Isabel Podda
*Delta Lloyd Asset Management N.V., a subsidiary of Aviva plc, is an asset
manager based in the Netherlands with a long established and successful track
record of investment in small and medium-sized companies. It is acquiring shares
in Eleco for its newly launched Delta Lloyd Europees Deelnemingem Fonds N.V..
A more detailed release follows:
15 November 2007
Eleco plc
Statement on current trading and prospects; acquisition of Milbury Systems
Limited ("Milbury") and its related freehold manufacturing facility for an
aggregate #7,065,000, of which #75,000 will be performance related, and vendor
placing of 3,000,000 Ordinary Shares of Eleco at 101p per share.
Trading Statement
The Board of Eleco approved the following trading statement which will be made
by the Executive Chairman at the Company's Annual General Meeting later today:-
ELECO PLC ('Eleco' or the 'Company')
Annual General Meeting Statement
Eleco plc, ( ELCO.L), the building systems and software group, wishes to update
the market on current trading and prospects ahead of its Annual General Meeting
which will be held at 12.00 noon today.
Updating shareholders on current trading, John Ketteley, Executive Chairman of
Eleco, said:
"I am pleased to report that turnover and profit of both our building systems
and software businesses were substantially higher in the first quarter than the
same period last year and that we continue to experience strong demand for our
products.
"The outlook for the majority of our business remains buoyant, as evidenced by a
significantly higher order book for our offsite construction products, strong
demand for our software and by our strong financial position and cash
generation. We therefore look forward with confidence to meeting the challenge
of the year ahead."
Acquisition
The Board of Eleco plc ("Eleco" or the "Company") today announces the
acquisition of the entire issued share capital of Milbury Systems Limited ("
Milbury") (the "Acquisition"). The total consideration for the Acquisition of up
to #6.035 million is to be satisfied as to #2.78 million in cash, as to #225,000
by the issue to the shareholders of Milbury (the "Vendors") of new Ordinary
Shares in Eleco subject to lock in arrangements (the "Consideration Shares") and
by the issue to the Vendors of 3,000,000 new Ordinary Shares in Eleco which have
been conditionally placed on behalf of the Vendors (the "Placing Shares").
Application has been made for the Placing Shares and the Consideration Shares to
be admitted to trading on AIM ("Admission") and trading is expected to commence
on 21 November 2007.
Eleco is also acquiring the freehold of a factory site of approximately 5.75
acres, currently occupied under a lease by Milbury, for a total cash
consideration of #1,030,000 (the "Property Purchase").
The cash element of the consideration for the Acquisition and the Property
Purchase will be satisfied from Eleco's existing cash and bank resources. Of the
cash consideration #75,000 is performance related.
Vendor Placing
The 3,000,000 Placing Shares, representing approximately 5.29 per cent. of the
current issued share capital of Eleco, have been conditionally placed on behalf
of the Vendors with Delta Lloyd Asset Management N.V. ("Delta Lloyd") at 101p
per share to realise #3.03 million. The Placing Shares will on issue rank pari
passu in all respects with the existing issued Ordinary Shares although, being
issued since the record date of 19 October 2007, they will not rank for the
proposed final dividend of 1.80p per share to be paid on 23 November 2007, if
approved by Eleco shareholders at the Annual General Meeting today. The Vendor
Placing is conditional only on the Placing Shares being admitted to trading on
AIM.
Information regarding Milbury
Milbury is a business established in 1978, based in Tickenham (near Bristol) and
Lydney (in Gloucestershire) in the UK, that engages in the production of
pre-cast and pre-stressed concrete products used for soil retention, cellars and
underground parking, materials and waste storage, security and blast walls,
pre-stressed floors and beams and columns. In addition, Milbury produces
concrete products for agricultural use including silage panels as well as slurry
and grain storage. Milbury also supplies concrete and steel tanks and aerobic
treatment systems and anaerobic digesters. Milbury is certified to ISO 9001:2000
and provides a comprehensive design, manufacture and installation service to its
clients principally operating in the construction, agriculture and environmental
management sectors.
Financial
Milbury's financial year end is 31 December. Set out below is Milbury's
financial performance in the last three financial periods:
Year ended 31 December Year ended 31 December Unaudited 9 months ended 30
2005 2006 September 2007
#'000 #'000 #'000
Turnover 7,124 8,365 6,806
Reported EBIT 303 682 808
Adjusted EBIT* 475 1,008 893
Net assets 954 1,364 1,899
*Adjusted for rentals paid on property and other assets being acquired as part
of the Acquisition and Property Purchase and for certain other payments made in
relation to shareholder directors.
Milbury has 53 staff and is headed by Robert Honey as Managing Director, who is
one of the original founders of the business and who is being retained under
consultancy arrangements for a period of six months.
Background to and reasons for the Acquisition
Eleco's subsidiary, Bell & Webster Concrete, is a major part of the Building
Systems operations of the Eleco Group. The Board of Eleco and the management of
Bell & Webster Concrete and Milbury have identified a number of positive reasons
why the businesses of Bell & Webster and Milbury would complement each other and
have identified a number of product, marketing and geographical synergies that
they believe will benefit both businesses. Some of these opportunities are
summarised below:
- Milbury provides new market opportunities for Eleco. For example, its
pre-stressed business is an area into which Eleco has considered expanding.
- Milbury is in a strategic geographical location for Eleco's concrete
business enabling it to expand into areas where Milbury's lower transportation
costs could be advantageous.
- Milbury's agricultural products complement the retaining walls
business of Bell & Webster Concrete.
- Milbury has an established position as a provider of environmental
control products for flood prevention and storage tanks in steel and concrete
for water and waste management.
- Eleco considers that the opportunity exists for investing in
production facilities at Milbury's site to facilitate expansion of production,
including of products currently manufactured by Bell & Webster Concrete and to
improve operational efficiencies.
Terms of the Acquisition
The consideration of up to #6.035 million comprises the payment of #2.78 million
in cash (to be satisfied out of the Company's existing resources) and the issue
of the Placing Shares and the Consideration Shares. In addition, Eleco will be
acquiring a freehold property owned by The Milbury Systems Retirement and
Benefits Scheme for a total cash consideration of #1,030,000. Save for deferred
consideration of #75,000, which is contingent on the EBITDA of Milbury for the
year ending 31 December 2007 being not less than #1.247 million, the
consideration is to be satisfied on completion, which will be following
Admission which is anticipated to occur on 21 November 2007. Under the share
purchase agreement the Vendors have given warranties and indemnities in relation
to Milbury and its business (including a covenant in relation to taxation).
These are subject to certain financial and other limitations.
The Placing Shares have been placed, conditional upon Admission, with Delta
Lloyd at a price of 101p per share on behalf of the Vendors. This price
represents a discount of approximately 5.2 per cent. to the closing mid market
price of the existing Ordinary Shares on 14 November 2007 (the business day
immediately preceding the publication date of this announcement). The Placing
Shares will represent approximately 5.0 per cent. of the enlarged issued share
capital of the Company.
Collins Stewart Europe Limited is acting exclusively for Eleco and for no one
else in relation to the Acquisition and will not regard any other person as its
client nor be responsible to anyone other than Eleco for providing the
protections afforded to clients of Collins Stewart Europe Limited, nor for
providing advice in relation to the Acquisition or any other matter referred to
in this announcement. Collins Stewart Europe Limited is authorised and regulated
by the Financial Services Authority.
- ENDS -
This information is provided by RNS
The company news service from the London Stock Exchange
END
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