Elecosoft Regulatory News (ELCO)

15 Nov 2007 07:02

Eleco PLC15 November 2007 For immediate release 15 November 2007 Eleco plc Statement on current trading and prospects; acquisition of Milbury SystemsLimited ("Milbury") and its related freehold manufacturing facility for anaggregate £7,065,000, of which £75,000 will be performance related, and vendorplacing 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 holdits Annual General Meeting ("AGM") at 12 noon today. At the AGM John Ketteley,Executive Chairman, will say that turnover and profit of both the buildingsystems and software businesses were substantially higher in the first quarterthan at the same time last year and that the outlook for the major part of itsbusiness is buoyant. A separate AGM statement has been released today and iscontained in full later in this announcement. Eleco plc is also pleased to announce the £7,065m acquisition of Milbury partfinanced 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 arecent record of good profits growth and which, we believe, will enable us toaccelerate the expansion of our existing concrete business. It will also give usthe opportunity to target different areas in the market. Eleco has had a strong start to the year with overall trading significantlyahead of the same period last year. We look forward to the challenges of theyear ahead with confidence." For further information please contact: Eleco plc Tel: 01920 443 830John Ketteley, Executive Chairman http://www.elecoplc.comjohn.ketteley@eleco.comDavid Dannhauser, Finance Directordavid.dannhauser@eleco.com Collins Stewart Europe Limited 020 7523 8350Nick Ellis / Philip Roe Buchanan Communications 020 7466 5000Tim Anderson / Isabel Podda *Delta Lloyd Asset Management N.V., a subsidiary of Aviva plc, is an assetmanager based in the Netherlands with a long established and successful trackrecord of investment in small and medium-sized companies. It is acquiring sharesin 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 SystemsLimited ("Milbury") and its related freehold manufacturing facility for anaggregate £7,065,000, of which £75,000 will be performance related, and vendorplacing 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 madeby 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 updatethe market on current trading and prospects ahead of its Annual General Meetingwhich will be held at 12.00 noon today. Updating shareholders on current trading, John Ketteley, Executive Chairman ofEleco, said: "I am pleased to report that turnover and profit of both our building systemsand software businesses were substantially higher in the first quarter than thesame period last year and that we continue to experience strong demand for ourproducts. "The outlook for the majority of our business remains buoyant, as evidenced by asignificantly higher order book for our offsite construction products, strongdemand for our software and by our strong financial position and cashgeneration. We therefore look forward with confidence to meeting the challengeof the year ahead." Acquisition The Board of Eleco plc ("Eleco" or the "Company") today announces theacquisition of the entire issued share capital of Milbury Systems Limited ("Milbury") (the "Acquisition"). The total consideration for the Acquisition of upto £6.035 million is to be satisfied as to £2.78 million in cash, as to £225,000by the issue to the shareholders of Milbury (the "Vendors") of new OrdinaryShares in Eleco subject to lock in arrangements (the "Consideration Shares") andby the issue to the Vendors of 3,000,000 new Ordinary Shares in Eleco which havebeen conditionally placed on behalf of the Vendors (the "Placing Shares"). Application has been made for the Placing Shares and the Consideration Shares tobe admitted to trading on AIM ("Admission") and trading is expected to commenceon 21 November 2007. Eleco is also acquiring the freehold of a factory site of approximately 5.75acres, currently occupied under a lease by Milbury, for a total cashconsideration of £1,030,000 (the "Property Purchase"). The cash element of the consideration for the Acquisition and the PropertyPurchase will be satisfied from Eleco's existing cash and bank resources. Of thecash consideration £75,000 is performance related. Vendor Placing The 3,000,000 Placing Shares, representing approximately 5.29 per cent. of thecurrent issued share capital of Eleco, have been conditionally placed on behalfof the Vendors with Delta Lloyd Asset Management N.V. ("Delta Lloyd") at 101pper share to realise £3.03 million. The Placing Shares will on issue rank paripassu in all respects with the existing issued Ordinary Shares although, beingissued since the record date of 19 October 2007, they will not rank for theproposed final dividend of 1.80p per share to be paid on 23 November 2007, ifapproved by Eleco shareholders at the Annual General Meeting today. The VendorPlacing is conditional only on the Placing Shares being admitted to trading onAIM. Information regarding Milbury Milbury is a business established in 1978, based in Tickenham (near Bristol) andLydney (in Gloucestershire) in the UK, that engages in the production ofpre-cast and pre-stressed concrete products used for soil retention, cellars andunderground parking, materials and waste storage, security and blast walls,pre-stressed floors and beams and columns. In addition, Milbury producesconcrete products for agricultural use including silage panels as well as slurryand grain storage. Milbury also supplies concrete and steel tanks and aerobictreatment systems and anaerobic digesters. Milbury is certified to ISO 9001:2000and provides a comprehensive design, manufacture and installation service to itsclients principally operating in the construction, agriculture and environmentalmanagement sectors. Financial Milbury's financial year end is 31 December. Set out below is Milbury'sfinancial 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 £'000Turnover 7,124 8,365 6,806Reported EBIT 303 682 808Adjusted EBIT* 475 1,008 893Net assets 954 1,364 1,899 *Adjusted for rentals paid on property and other assets being acquired as partof the Acquisition and Property Purchase and for certain other payments made inrelation to shareholder directors. Milbury has 53 staff and is headed by Robert Honey as Managing Director, who isone of the original founders of the business and who is being retained underconsultancy 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 BuildingSystems operations of the Eleco Group. The Board of Eleco and the management ofBell & Webster Concrete and Milbury have identified a number of positive reasonswhy the businesses of Bell & Webster and Milbury would complement each other andhave identified a number of product, marketing and geographical synergies thatthey believe will benefit both businesses. Some of these opportunities aresummarised below: - Milbury provides new market opportunities for Eleco. For example, itspre-stressed business is an area into which Eleco has considered expanding. - Milbury is in a strategic geographical location for Eleco's concretebusiness enabling it to expand into areas where Milbury's lower transportationcosts could be advantageous. - Milbury's agricultural products complement the retaining wallsbusiness of Bell & Webster Concrete. - Milbury has an established position as a provider of environmentalcontrol products for flood prevention and storage tanks in steel and concretefor water and waste management. - Eleco considers that the opportunity exists for investing inproduction facilities at Milbury's site to facilitate expansion of production,including of products currently manufactured by Bell & Webster Concrete and toimprove operational efficiencies. Terms of the Acquisition The consideration of up to £6.035 million comprises the payment of £2.78 millionin cash (to be satisfied out of the Company's existing resources) and the issueof the Placing Shares and the Consideration Shares. In addition, Eleco will beacquiring a freehold property owned by The Milbury Systems Retirement andBenefits Scheme for a total cash consideration of £1,030,000. Save for deferredconsideration of £75,000, which is contingent on the EBITDA of Milbury for theyear ending 31 December 2007 being not less than £1.247 million, theconsideration is to be satisfied on completion, which will be followingAdmission which is anticipated to occur on 21 November 2007. Under the sharepurchase agreement the Vendors have given warranties and indemnities in relationto 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 DeltaLloyd at a price of 101p per share on behalf of the Vendors. This pricerepresents a discount of approximately 5.2 per cent. to the closing mid marketprice of the existing Ordinary Shares on 14 November 2007 (the business dayimmediately preceding the publication date of this announcement). The PlacingShares will represent approximately 5.0 per cent. of the enlarged issued sharecapital of the Company. Collins Stewart Europe Limited is acting exclusively for Eleco and for no oneelse in relation to the Acquisition and will not regard any other person as itsclient nor be responsible to anyone other than Eleco for providing theprotections afforded to clients of Collins Stewart Europe Limited, nor forproviding advice in relation to the Acquisition or any other matter referred toin this announcement. Collins Stewart Europe Limited is authorised and regulatedby the Financial Services Authority. - ENDS - This information is provided by RNS The company news service from the London Stock Exchange