Last checked at 18 Oct 2010 07:00
Acquisition of Hydratron & Trading Update
Acquisition
Pressure Technologies plc ("Pressure Technologies" or the "Group") is pleased to announce that, on Friday 15 October 2010, it completed the acquisition of the Hydratron group of companies ("Hydratron"), based in the UK, USA and Australia, for a cash consideration of £3.3 million.
An initial cash payment of £2.5 million was made on completion. This will be followed by two deferred payments of £400,000 to be paid in October 2011 and August 2012. The consideration represents a multiple of seven times Hydratron's UK operating EBITDA, based on unaudited financial statements for the year ended 30 April 2010. Hydratron had sales of £4.0 million in the UK in the year ended 30 April 2010. The US and Australian operations are essentially start-up businesses. The net assets of Hydratron, after elimination of investment in subsidiaries, were approximately £1.1 million, based on unaudited management accounts. Pre-tax profit attributable to the net assets being acquired was £0.3 million.
Hydratron designs, manufactures and sells a range of air operated high pressure hydraulic pumps, gas boosters, power packs, hydraulic control panels and test rigs. The business was established in 1981 and Hydratron has since established itself as a leading supplier of quality high pressure equipment to the oil and gas industries. The full range of Hydratron products may be viewed at www.hydratron.co.uk.
Hydratron has sales and manufacturing companies in Altrincham, UK, and Houston, USA. It also has a small stockist and distribution company in Brisbane, Australia, and a spread of third party distributors in key locations around the world. Hydratron currently employs 46 staff in the UK, five in the USA and two in Australia. As part of the agreement, the Australian subsidiary will be closed. A full-time sales presence, however, will be maintained in the region to service Australia and the Pacific Rim countries with products supplied from the UK. Full provision for the closure was made prior to the completion of the acquisition and there will be no costs to the Group, resulting from the closure.
The US business, Hydratron Inc, which was established in 2007, is strategically located at centre of the US oil industry in Houston and is expected to be a key contributor to growth. Its people and facilities will be utilised by Al-Met Limited, Pressure Technologies' UK based wear parts subsidiary, to service the US market.
Hydratron's fabrication capabilities in the UK will also be used by the Group to manufacture biogas upgraders for the Chesterfield BioGas division.
Philip Sanders, the Managing Director and principal shareholder of Hydratron, has agreed to stay with the company until August 2012. He will manage the integration process, as well as lead the expansion of the US business. A succession plan had already been implemented at Hydratron, in anticipation of the company's sale, and capable managers are in place at all levels in the business.
John Hayward, Chief Executive of Pressure Technologies, said: "Hydratron has been on our target list for a long time, as it shares Pressure Technologies' passion for innovative design, high quality and solid engineering skills. The business has good growth prospects and synergies with other parts of our Group, as well as providing an anchor for other potential acquisitions serving the oil and gas sector and direct access to the US market. It is a valuable addition to our portfolio of companies."
As well as providing good growth prospects, the acquisition also strengthens the Group through further diversification, as Hydratron is not dependent on the deep water oil and gas market.
Trading Update
The Group's performance for the year ended 30 September 2010 is anticipated to be in line with market expectations.
The deep water oil and gas market, however, remains depressed, as a result of the economic cycle and the after effects of the Gulf of Mexico oil spill. Anticipated orders for deep water projects at the Group's subsidiary, Chesterfield Special Cylinders, are still pending. Receipt of firm orders by December 2010 will be key to the Group meeting current market expectations for the year ending 30 September 2011, which exclude the impact of the Hydratron acquisition announced today. Typically, the products produced by Chesterfield Special Cylinders for the deep water oil and gas market are on lead times of up to six months. The Board, therefore, will be in a more informed position to update the market on the outlook for the Group at the time of the Final Results for the year ended 30 September 2010, which are expected to be announced early in December 2010.
For further information, please contact:
| Pressure Technologies plc John Hayward
| Tel: 0114 242 7500 www.pressuretechnologies.co.uk
|
| Fairfax I.S. PLC Ewan Leggat/Simon Bennett/Laura Littley
| Tel: 0207 598 5368 |
| Rawlings Financial PR Limited Catriona Valentine
| Tel: 01653 618 016 catriona@rawlingsfinancial.co.uk www.rawlingsfinancial.co.uk
|
Company description:
Pressure Technologies is the holding company for Chesterfield Special Cylinders Limited ("CSC"). CSC designs, manufactures and offers retesting and refurbishment services for a range of speciality high-pressure, seamless steel gas cylinders for global energy and defence markets. The business has been conducted under the "Chesterfield" brand which is a long established name in the cylinders and specialised pressure vessel market.
Chesterfield BioGas ("CBG"), an operating division of Pressure Technologies, formed in November 2008 following the signing of a co-operation agreement with Greenlane Biogas Limited, the world leader in biogas upgrading from raw biogas to vehicle quality fuel, gives Pressure Technologies exclusive rights to market Greenlane equipment in the UK and Eire. Chesterfield BioGas will provide turnkey solutions for the cleaning, storage and dispensing of biomethane, produced from waste water treatment and anaerobic digestion of organic waste.
Al-Met Limited ("Al-Met"), which was acquired by the Group in February 2010, is a niche manufacturer of specialised, precision engineered valve wear parts used in the oil and gas industries, based in Pontyclun, near Cardiff. Al-Met's products are used in high-pressure choke and flow control valves, designed to regulate flow volumes in extremely demanding applications in the subsea and surface oil and gas industries. The business, established in 1985, has developed a leading edge capability in precision machining carbides and superalloy matrix materials. The ability to combine high alloy steels with tungsten carbide inserts and specialised coatings gives Al-Met its niche position with its customers, global wellhead and subsea equipment OEMs.