Lon.sec Regulatory News (LSC)

12 Oct 2007 14:51

London Security PLC12 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 ExtraordinaryGeneral Meeting ("EGM") of the Company to vote on the resolutions relating tothe proposed disposal of Total TF AG, Othmar Hug Feuerschutz GmbH, FeuerloscherNu-Swift (Schweiz) AG and Maclin S.A (together "the Swiss Companies") to MrJacques Gaston Murray, the Group's Chairman and the largest shareholder in theGroup (the "Disposal") and, subject to the Disposal being approved, the paymentof a special dividend of 50 pence per share to shareholders. The Directors have agreed to sell the Swiss Companies, subject to shareholderapproval, to Swiss Fire Holding S.A. (the "Purchaser), a company wholly owned byMr Murray, for the aggregate cash consideration of £5,991,000 (equivalent to14,452,000 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 returnedto shareholders through the payment of a special dividend of 50 pence per share. Henry Shouler and Michael Gailer (together the "Independent Directors") havebeen advised by Brewin Dolphin Limited, the Company's Nominated Adviser, thatthe terms of the Disposal are fair and reasonable insofar as all Shareholdersare concerned. The Independent Directors consider that the terms of the transaction are fairand 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 theprofitability of the Swiss Companies. This has resulted in the increase inprofitability in 2006 shown in the further financial information set out below.However, the Directors consider that the market in Switzerland is relativelymature. Accordingly they are concerned about the sustainability of such profitlevels and do not expect any organic growth. Jacques Gaston Murray has recentlyinvested in properties & hotels in Switzerland on a personal basis. Mr Murraywishes to be involved in various businesses in Switzerland and, as such, wishesto buy the Swiss Companies. Mr Murray is prepared to pay an arm's length price for the Swiss Companies andthe Directors consider this to be an opportunity to return value toShareholders. The Directors further believe that there is greater opportunityfor growth in the Group's larger, more dynamic markets in the UK, Belgium andHolland. Consequently, the Directors believe it to be a good time to sell theSwiss Companies. Structure of the Disposal In addition to the share purchase agreements which are conditional onshareholder approval, the Company has also entered into the following agreementsin 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 andthe Swiss Companies for the provision of various head office management serviceson arm's length commercial terms which will continue post completion of theshare purchase agreements. No change will be made to the levels of fees orservices to be provided. Financial Information on the Swiss Companies Profit and Loss Account 2006 2005 ------ ------ CHF'000 CHF'000 --------- ---------Turnover 6,239 4,944Cost 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 assetsTangible assets 185 140Intangible assets 0 0 --------- ---------- 185 140 --------- ---------- Current AssetsStocks 340 396Debtors 816 557Cash at bank and in hand 2,950 2,792 --------- ---------- 4,106 3,745 --------- ---------- --------- ----------Creditors: amounts falling duewithin one year (1,111) (504) --------- ---------- Net Current assets 2,995 3,241 --------- ---------- Total assets less currentliabilities 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 anaggregation of these statements extracted from the audited accounts of each ofthe Swiss Companies. 2. A dividend of CHF 1.7 million was paid in 2007 which reduced the net assetsin 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 fireextinguishers across Switzerland. Contacts: London Security plc 01422 372852Richard Pollard Brewin Dolphin Investment Banking 0845 270 8613Andrew Kitchingman ENDS This information is provided by RNS The company news service from the London Stock Exchange