Disposal
October 12 2007 - 10:51AM
UK Regulatory
RNS Number:6481F
London Security PLC
12 October 2007
London Security plc (the "Group" or the "Company")
12 October 2007
Related Party Transaction
The Group has today posted to shareholders a circular convening an Extraordinary
General Meeting ("EGM") of the Company to vote on the resolutions relating to
the proposed disposal of Total TF AG, Othmar Hug Feuerschutz GmbH, Feuerloscher
Nu-Swift (Schweiz) AG and Maclin S.A (together "the Swiss Companies") to Mr
Jacques Gaston Murray, the Group's Chairman and the largest shareholder in the
Group (the "Disposal") and, subject to the Disposal being approved, the payment
of a special dividend of 50 pence per share to shareholders.
The Directors have agreed to sell the Swiss Companies, subject to shareholder
approval, to Swiss Fire Holding S.A. (the "Purchaser), a company wholly owned by
Mr Murray, for the aggregate cash consideration of #5,991,000 (equivalent to
14,452,000 Swiss francs calculated at the exchange rate on 10 October 2007 of #
: 2.4123).
The Directors are also proposing that the proceeds of the Disposal are returned
to shareholders through the payment of a special dividend of 50 pence per share.
Henry Shouler and Michael Gailer (together the "Independent Directors") have
been advised by Brewin Dolphin Limited, the Company's Nominated Adviser, that
the terms of the Disposal are fair and reasonable insofar as all Shareholders
are concerned.
The Independent Directors consider that the terms of the transaction are fair
and reasonable insofar as its shareholders are concerned.
Further details of the Disposal are set out below:
Reasons for the Disposal of the Swiss Companies
In recent years, the Group's management has worked hard to improve the
profitability of the Swiss Companies. This has resulted in the increase in
profitability in 2006 shown in the further financial information set out below.
However, the Directors consider that the market in Switzerland is relatively
mature. Accordingly they are concerned about the sustainability of such profit
levels and do not expect any organic growth. Jacques Gaston Murray has recently
invested in properties & hotels in Switzerland on a personal basis. Mr Murray
wishes to be involved in various businesses in Switzerland and, as such, wishes
to buy the Swiss Companies.
Mr Murray is prepared to pay an arm's length price for the Swiss Companies and
the Directors consider this to be an opportunity to return value to
Shareholders. The Directors further believe that there is greater opportunity
for growth in the Group's larger, more dynamic markets in the UK, Belgium and
Holland. Consequently, the Directors believe it to be a good time to sell the
Swiss Companies.
Structure of the Disposal
In addition to the share purchase agreements which are conditional on
shareholder approval, the Company has also entered into the following agreements
in connection with the Disposal:
*a conditional agreement with Mr Murray and the Purchaser that, following
completion of the Disposal, the Company will not compete with the Purchaser/
Mr Murray in its business in Switzerland and the Purchaser/ Mr Murray will
do likewise in respect of the United Kingdom, Belgium, the Netherlands and
Austria.
*exclusive supply agreements between the Purchaser, the Swiss Companies
and each of Nu-Swift International Limited and Ansul SA. These agreements
provide for the supply by the Group of fire fighting and associated products
to the Purchaser in Switzerland for an initial period of three years from
completion of the Disposal.
There is in existence a management services agreement between EOI Fire SARL and
the Swiss Companies for the provision of various head office management services
on arm's length commercial terms which will continue post completion of the
share purchase agreements. No change will be made to the levels of fees or
services to be provided.
Financial Information on the Swiss Companies
Profit and Loss Account
2006 2005
------ ------
CHF'000 CHF'000
--------- ---------
Turnover 6,239 4,944
Cost of Sales (922) (925)
-------- ---------
Gross Profit 5,317 4,019
Other costs (3,394) (3,011)
-------- ---------
Operating Profit 1,923 1,008
Interest Payable (1) (5)
-------- ---------
Profit before Tax 1,922 1,003
Taxation (425) (103)
-------- ---------
Profit after Tax 1,497 900
-------- ---------
Balance Sheet
2006 2005
CHF 000's CHF 000's
Fixed assets
Tangible assets 185 140
Intangible assets 0 0
--------- ----------
185 140
--------- ----------
Current Assets
Stocks 340 396
Debtors 816 557
Cash at bank and in hand 2,950 2,792
--------- ----------
4,106 3,745
--------- ----------
--------- ----------
Creditors: amounts falling due
within one year (1,111) (504)
--------- ----------
Net Current assets 2,995 3,241
--------- ----------
Total assets less current
liabilities 3,180 3,381
--------- ----------
--------- ----------
Net assets 3,180 3,381
--------- ----------
--------- ----------
Equity shareholders' funds 3,180 3,381
--------- ----------
Notes:
1. The information in the Profit and Loss Account and the Balance Sheet is an
aggregation of these statements extracted from the audited accounts of each of
the Swiss Companies.
2. A dividend of CHF 1.7 million was paid in 2007 which reduced the net assets
in the Swiss Companies and transferred value to the Group.
Activities of the Swiss Companies
The Swiss Companies are involved in the servicing and maintenance of fire
extinguishers across Switzerland.
Contacts:
London Security plc 01422 372852
Richard Pollard
Brewin Dolphin Investment Banking 0845 270 8613
Andrew Kitchingman
ENDS
This information is provided by RNS
The company news service from the London Stock Exchange
END
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