Fih Group Regulatory News (FIH)

4 Mar 2008 16:33

Falkland Islands Holdings PLC04 March 2008 4 March 2008 Falkland Islands Holdings plc Acquisition of Momart Highlights • Acquisition of Momart for £10.27 m by Falkland Islands Holdings plc • Momart is a UK market leader in fine art logistics and storage with a blue chip client list • Art removal and storage market growth is driven by internationalisation of art market, re-distribution of global wealth and trend for outsourcing • Since 1998 Momart has delivered a Compound Annual Growth Rate in turnover of 7.9% • Acquisition expected to be significantly EPS enhancing • Momart's customers include The Victoria and Albert Museum. The Tate Galleries, The Royal Collection, Damien Hirst and The Henry Moore Foundation • Scope for international expansion and growth Acquisition of Momart The Board of Falkland Islands Holdings plc ("FIH" or the "Group"), theinternational services Group which owns essential services businesses focused ontransport and logistics and which has a major shareholding in Falkland Oil andGas ("FOGL"), is pleased to announce the acquisition of Momart International Ltd("Momart"), the international art logistics and storage company, for £10.27m.Momart is being acquired from its management and employees for a mixture ofcash, deferred consideration and shares in FIH. The acquisition is conditionalon the admission of the new FIH shares to trading on AIM, which is expected totake place tomorrow (5 March 2008). Following the acquisition, Momart's key management and staff will continue towork within the Group to drive its continued expansion, particularly in rapidlygrowing overseas markets. It is expected that the acquisition will besignificantly accretive to EPS post completion and further strengthens theGroup's earnings base within the transport services sector. It also enhancesFIH's overall growth prospects. Momart was established in 1971 and has grown steadily to become aglobally-respected logistics group focused exclusively on the storage,transportation and installation of fine art, ranging from paintings, tosculptures, to complex installations, into, out of and within the UnitedKingdom. Momart has a highly trained workforce and a fleet of purpose builtspecialist vehicles operating from its modern 78,000 sq.ft. storage facility inEast London. Momart enjoys an estimated 13% of a market estimated to be worthapproximately £85m in the UK. The Company is a trusted partner of choice formajor art institutions, galleries and artists in the UK and internationally.Clients include: UK Institutions The Victoria and Albert Museum, The Royal Academy, The Tate Galleries, TheNational Gallery and The British Museum Collections The Royal Collection, The Henry Moore Foundation, and The UBS Collection Artists Damien Hirst and Antony Gormley Overseas Institutions The Metropolitan Museum of New York, The National Gallery of Art Washington, JPaul Getty Museum - Los Angeles, The Pompidou Centre - Paris and The HermitageSt Petersburg Momart has a wide spread of clients, with no single customer accounting for morethan 8% of turnover. Over 30 years Momart has developed a team of skilledcraftsmen with a thorough knowledge and appreciation of the artefacts handledand it delivers a consultancy-led solution to organisers of major exhibitionsand galleries, providing clients with the care and attention to detail theydemand and helping them to accurately cost, plan and orchestrate the movement,collection and display of priceless works of art across the globe. Momart's audited accounts to 31 August 2007 showed turnover of £12.3 million,pre-tax profits of £1.2 million and net assets of £0.35 million. Profits forthat year before bank interest and depreciation/amortisation were £1.65m. In the10 year period to August 2007, helped by the steady growth in the globalmovement of art, Momart's turnover increased by over 90% (a compound annualgrowth rate of 7.9%) and in the five month period to 31 January 2008 sales haveincreased 9.8% over the comparable prior period. Deal Structure The consideration comprises: £7.78m in cash and 582,666 new FIH shares. The cash is payable as follows: • £4.61m payable on or shortly after completion,• £1.55m payable on 15 January 2009 and• £1.62m two years following completion in March 2010. The aggregate value of the consideration amounts to £10.269 million (based onthe closing price of 427.5p of an FIH share on 3 March 2008). The deferred payments are supported by a bank guarantee and are subject tocertain directors remaining with the business. The cash consideration payable on completion is being financed out of FIH'sexisting cash resources and a £4.0m term bank loan. Certain non-trading assetsof Momart are also to be sold and the net proceeds paid to the vendors. The sale and purchase contract contains warranties and non competition covenantsin favour of FIH. Following the allotment of new FIH shares to the vendors, FIH will have9,052,876 ordinary shares of 10p each in issue. Application has been made toLondon Stock Exchange plc for the 582,666 new FIH shares to be admitted totrading on AIM. Seventy-five percent of the FIH shares being issued are subjectto a 12 month lock-in. The vendors were advised by Livingstone Partners LLP. David Hudd, Chairman of Falkland Islands Holdings plc, said: "I am delighted that we have been able to acquire Momart which meets all the keycriteria we identified during our acquisition search. Momart is a high qualitybusiness with a strong management team and is a good cultural fit with FIH. Theacquisition gives FIH a new source of earnings from a business with a longrecord of cash generation and profits, and which has superior growth prospects. "For FIH shareholders, on a pro forma historical basis, earnings per share willbe significantly enhanced without any significant dilution in the Group'sindirect interest in FOGL. This along with our progressive dividend policydemonstrates our commitment to maximizing shareholder value." Enquiries Falkland Islands Holdings plcDavid Hudd, Chairman, Tel: 07771 893 267John Foster, Managing Director, Tel: 01279 461 630 Dawnay, Day Corporate Finance Ltd, Nominated adviser to FIHDavid Floyd Tel: 020 7509 4570 Financial DynamicsBilly Clegg/ Georgina Bonham/ Edward Westropp Tel: 020 7831 3113 Livingstone Partners, adviser to the vendors of MomartEleanor Clow Tel: 020 7484 4742 Notes to Editors About FIH Prior to acquiring Momart, FIH had two principal operating subsidiaries: TheFalkland Islands Company ("FIC" - incorporated in 1852); and The PortsmouthHarbour Ferry Company ("PHFC" - incorporated in 1883). It also had a 16.2%shareholding in Falkland Oil & Gas Limited. Prior to the admission of new FIHshares pursuant to the acquisition of Momart, FIH's market capitalisation (basedon yesterday's closing price of 427.5p) was £36.2m. FIC operates retail and support services businesses in the Falkland Islandswhere it has a number of retail outlets selling a wide range of items fromcornflakes to cement and Land Rovers. Other support service operations includefishing and shipping agency, port services, and an insurance agency. Turnoverfor the year ended 31 March 2007 was £12.2 million. PHFC operates a ferry service between Portsmouth and Gosport for footpassengers, bicycles and motorcycles, a water taxi service and summer cruising.Turnover for the year ended 31 March 2007 was £3.4 million achieved fromferrying nearly 3.6 million passengers across the harbour. FIH was also a founder shareholder in and still owns 15 million shares (16.2%)in the AIM quoted Falkland Oil & Gas Limited ("FOGL"), which is exploring foroil in a 48,900 sq km licence area (equivalent to over 220 north Sea blocks) tothe South and East of the Falkland Islands. FOGL has recently announced afarm-in by BHP Billiton who will be paying approximately 68% of the costs oftthe near term work programme, including the drilling of two exploration wellsand other associated costs. BHP Billiton has also paid FOGL $12.75m inreimbursement of costs already incurred. FOGL had a market capitalisation of£120m (based on yesterday's closing price of 130p). About Momart Momart is an acknowledged authority on the handling of fine arts andantiquities. Its expertise with fragile, rare, valued and monumental objectshas made it one of the largest specialists in its field world-wide. Many years of experience and detailed planning enable Momart to create a costefficient service for all its clients - from moving a single picture to handlingan international exhibition or corporate collection. The cornerstone of the relationship between the Momart workforce and its clientsis centered on a shared passion for art and its care. Low staff turnover across many years has enabled Momart to build a wealth ofexpertise in handling every aspect of a client's needs, from an individual to anational institution. Momart's personnel have handled the majority of all majorexhibitions in the UK over the past twenty years. This information is provided by RNS The company news service from the London Stock Exchange