28th Apr 2006 07:02
VT GROUP PLC28 April 2006 VT GROUP EXPANDS SUPPORT SERVICES WITH £87 MILLION ACQUISITION OF VEHICLE SUPPORT BUSINESSES VT Group plc (VT), the support services and shipbuilding company, hasstrengthened its portfolio of support services with the announcement today ofthe acquisition of four vehicle support businesses from RAC plc (part of Avivaplc). The acquisition has been completed for a total cash consideration of £87million. The businesses comprise Lex Transfleet Limited, Lex Defence Limited, Lex DefenceManagement Limited and RAC Software Solutions Limited. The activities of these businesses include fleet management and administration;maintenance, repair and logistic support; vehicle provision and disposal;software and support, and asset finance. Their capability was highlighted in therecent Defence Industrial Strategy which emphasised the Ministry of Defence'sstated intention to move to more turnkey contracting. The four businesses have some 27,000 vehicles under their fleet management. Over14,000 are provided under a contract with the MoD to supply all non-combatvehicles including cars, emergency vehicles and other specialist vehicles. Inaddition, over 3,000 construction and related vehicles are provided to the MoD. A new contract with the Metropolitan Police, starting this month, will focus onfleet management, repair and short term rental services covering 3,600 vehicles. In airport ground support operations, Lex Transfleet Limited is the exclusiveprovider of fleet management and maintenance services for British Airways at itsmajor UK terminals. Together, the businesses had a turnover of £140 million for the year endedDecember 31, 2005. Profit before interest and tax was £10.3 million with a totalorder book in excess of £1.25 billion. The businesses have gross assets of £81.3million. The businesses are expected to show continued growth during 2006 and beyond as aresult of the recently secured work with the Metropolitan Police and provisionof transport services to the MoD, under the Allenby Connaught contract. A further vehicle capability contract with the MoD for plant and constructionequipment is a joint venture with Amey plc that will be subject to JV accountingunder IFRS rules. On completion, VT Group's share of this JV's bank debt will be£12 million. The acquisition will provide a strong strategic fit with VT's existing defencesupport services business and implements one of the key elements of theGovernment's Defence Industrial Strategy in promoting contracting foravailability. It will be funded from a combination of the Group's existing cash balances and anew debt facility. In addition to this new facility, VT has recently completedthe re-financing of its OPV PFI contract, resulting in on-balance sheet PFI debtbeing reduced by £51 million. The sale and leaseback of certain VTCommunications assets has also been completed, with the result that £48 millionof short term debt has been repaid. VT Chief Executive Paul Lester commented: "This acquisition is highlycomplementary to our defence support work in offering turnkey asset availabilityand capability solutions to the MoD. The land-based solutions provide strongsimilarities with VT Defence's existing contracts for MoD in ships and aircraft. "We have worked closely with these businesses over the past five years throughour joint bid for Airfield Support Services, during which time we got to knowthem well. They are highly regarded in the defence sector and by theircustomers." Mr Lester added that the new businesses would provide scope for migratingadditional vehicle support skills into VT's US operations where the Groupalready manages 2,500 military support vehicles. They would also give VT theopportunity to expand its activities in the emergency sector. "This major move offers an exciting combination of existing contracts and scopefor considerable future development," he said. Contact: Paul Lester, Chief Executive 01489 775211/ 07785 388664 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Aviva