25th May 2005 11:31
Davis Service Group PLC25 May 2005 Not for release, distribution or publication, in whole or in part, in or into the United States, Canada, Australia or Japan For immediate release25 May 2005 The Davis Service Group Plc Sale of Elliott Group Limited ("Elliott") Intention to return capital • Sale of Elliott, the building systems business of The Davis Service Group Plc ("Davis"), for total gross proceeds of £166 million • Elliott is being acquired by a management buy-out vehicle backed by TDR Capital and funds associated with TDR Capital and other financial co-investors • The Board intends to return up to £150 million to shareholders Commenting on the announcement, Roger Dye, Chief Executive of Davis, said: "I am pleased to announce the sale of Elliott and our intention to return asignificant amount of capital to our shareholders. This completes the focusingof Davis's operations onto its core textile maintenance activities. The newlyfocused group will continue to pursue organic growth opportunities across itsmarkets and, where appropriate, look to make targeted acquisitions." Enquiries: The Davis Service Group Plc +44 (0)20 7259 6663Roger Dye, Chief ExecutiveKevin Quinn, Finance Director Dresdner Kleinwort Wasserstein +44 (0)20 7623 8000Rosalind Hedley-MillerChristopher Baird Financial Dynamics +44 (0)20 7269 7291Richard MountainAndrew Lorenz This announcement is made by Davis and is the sole responsibility of Davis.Davis is exclusively responsible for the contents of this announcement andneither Dresdner Kleinwort Wasserstein Limited ("Dresdner Kleinwort Wasserstein") nor any person acting on Davis's behalf is responsible for or shall have anyliability for any information, representation or statement relating to Daviscontained in this announcement or any information previously published by or onbehalf of Davis or otherwise. Dresdner Kleinwort Wasserstein, which isauthorised and regulated by the Financial Services Authority, is acting forDavis and for no-one else in connection with the proposed sale of Elliott andthe intention to return capital to shareholders described in this announcementand will not be responsible to anyone other than Davis for providing theprotections afforded to customers of Dresdner Kleinwort Wasserstein, or foraffording advice in relation to the contents of this document or any mattersreferred to herein. Prices and values of, and income from, shares may go down as well as up and aninvestor may not get back the amount invested. It should be noted that pastperformance is no guide to future performance. Persons needing advice shouldcontact an independent financial adviser. Not for release, distribution or publication, in whole or in part, in or into the United States, Canada, Australia or Japan For immediate release25 May 2005 The Davis Service Group Plc Sale of Elliott Group Limited ("Elliott") Intention to return capital The Davis Service Group Plc ("Davis") announces that it has sold its buildingsystems business, Elliott, for total gross proceeds of £166 million. Elliott isbeing purchased by a management buy-out vehicle backed by TDR Capital and fundsassociated with TDR Capital and other financial co-investors. Background to and reasons for the sale Since the £426 million acquisition of Sophus Berendsen A/S in 2002, Davis hasfocused on developing its core textile maintenance activities based in theUnited Kingdom, Eire and Continental Europe. On 21 January 2004, Davis completed the sale of HSS Hire Service Group plc ("HSS"), its tool hire business. Subsequent to the disposal of HSS and following thereceipt of a number of approaches from third parties, Davis reviewed thestrategic options available to it in respect of Elliott. On 22 December 2004, Davis confirmed that it was in discussions with a number ofpotential purchasers of Elliott. Since that date discussions have continued andthe transaction announced today is the culmination of those discussions. Following the sale of Elliott, the newly focused group will continue toconcentrate on developing the group's textile maintenance activities, both bypursuing organic growth opportunities across its markets and, where appropriate,looking to make targeted acquisitions. Information on Elliott Elliott, a wholly owned subsidiary of Davis, is principally engaged in thedesign and manufacture of factory-produced buildings which are supplied on ahire or a direct sale basis. The product range includes steel security stores,large mobile unit office complexes, school classrooms and cell sites for thetelecommunications industry. Elliott operates from five manufacturing facilities and a network of 35 hiredepots in the United Kingdom. In December 2004, Davis sold the Elliott depot atThame, realising gross proceeds of £4.5 million. In the year ended 31 December2004, Elliott had turnover of £146.2 million and an operating profit (beforegoodwill amortisation and exceptional items) of £17.8 million. As at 31December 2004, Elliott had net operating assets of £85.5 million includinggoodwill of £7.0 million. In the Chairman's AGM statement released on 26 April 2005, Elliott's currenttrading was described as follows: "Orders for Elliott's direct sale productshave been disappointing, especially from the public sector, whilst its hire andrental activities continue to plan". Since that date, Elliott's trading hascontinued in line with these trends. Information on TDR Capital TDR Capital is a private equity partnership managed by Manjit Dale and StephenRobertson. Based in London, TDR Capital was established to make private equityinvestments, particularly buyouts in Europe. In 2004, TDR Capital acquiredAlgeco, the European leader in modular buildings rental and sales, in a Euro 600million French public-to-private transaction. Terms of the sale TDR Capital has agreed, through a management buy-out vehicle, to acquire Elliottfor total gross proceeds of £166 million, of which £10 million is a pre-saledividend. Under the terms of the sale (and included within the £166 million),the purchaser will repay £18.5 million of inter-group debt and assume thirdparty debt obligations, valued for the purpose of the sale at £18.8 million. Inconnection with the disposal, Davis has provided customary warranties andindemnities, subject to limitations both in respect of quantum and period. Board Paul Smeeth, an executive director of Davis and managing director of Elliott,has resigned from the Board of Davis with immediate effect. The Board wouldlike to take this opportunity to thank Paul for his significant contributionduring his 18 years with Davis. Use of proceeds As at 31 December 2004, Davis had consolidated net assets of £434.3 million andnet borrowings of £250.5 million. As part of its ongoing treasury activities,the Board is currently re-financing Davis's banking facilities and expects tocomplete this on attractive commercial terms. The reduction in the group's net debt as a result of the sale will be £161million, being the gross proceeds of £166 million, less estimated advisory andtransaction expenses of £5 million. Separately, Davis has decided to make acash transfer to the Davis pension fund of £22.5 million to cover the potentialdeficit in the Davis pension fund in respect of the past service of HSS(previously provided for in Davis's 2003 results) and Elliott staff. Having considered the capital requirements of the ongoing group, the Boardintends to return up to £150 million of capital to shareholders. It is expectedthat this return will be made by way of a B Share scheme, which will beaccompanied by a share consolidation in order to assist comparability of shareprice, EPS and dividends. Relevant documentation setting out further details ofthe B share scheme, the share consolidation and notice of an ExtraordinaryGeneral Meeting (to implement the return of capital and share consolidation)will be sent to shareholders in due course. Should the full amount of theproposed return of capital be made, Davis's pro forma net debt at 31 December2004 would be approximately £262 million. Financial effects The Directors estimate that, before goodwill amortisation and exceptional items,the net impact of the sale and return of capital will be earnings dilutive inthe year ending 31 December 2005 and broadly earnings neutral in the year ending31 December 2006 based on the current Davis share price. The sale is expectedto give rise to a profit on disposal of approximately £65 million (underforthcoming IFRS disclosure), before deducting estimated advisory andtransaction expenses of £5 million. The above statements regarding earnings andprofit on disposal should not be construed as profit forecasts and shareholdersshould not assume that earnings per share of Davis for the current year orfuture years will necessarily be higher, or lower, than in the previous year. Current trading and prospects of Davis In the Chairman's AGM statement released on 26 April 2005, Davis's Chairmancommented that: "Overall, our view of the Group's prospects for 2005 remainsunchanged from 24 February when we released our 2004 preliminary results". TheBoard's view of the Group's operations (excluding Elliott) remains unchanged.Going forward, the Board intends to continue with its existing dividend policy. Enquiries: The Davis Service Group Plc +44 (0)20 7259 6663Roger Dye, Chief ExecutiveKevin Quinn, Finance Director Dresdner Kleinwort Wasserstein +44 (0)20 7623 8000Rosalind Hedley-MillerChristopher Baird Financial Dynamics +44 (0)20 7269 7291Richard MountainAndrew Lorenz This announcement is made by Davis and is the sole responsibility of Davis.Davis is exclusively responsible for the contents of this announcement andneither Dresdner Kleinwort Wasserstein Limited ("Dresdner Kleinwort Wasserstein") nor any person acting on Davis's behalf is responsible for or shall have anyliability for any information, representation or statement relating to Daviscontained in this announcement or any information previously published by or onbehalf of Davis or otherwise. Dresdner Kleinwort Wasserstein, which isauthorised and regulated by the Financial Services Authority, is acting forDavis and for no-one else in connection with the proposed sale of Elliott andthe intention to return capital to shareholders described in this announcementand will not be responsible to anyone other than Davis for providing theprotections afforded to customers of Dresdner Kleinwort Wasserstein, or foraffording advice in relation to the contents of this document or any mattersreferred to herein. Prices and values of, and income from, shares may go down as well as up and aninvestor may not get back the amount invested. It should be noted that pastperformance is no guide to future performance. Persons needing advice shouldcontact an independent financial adviser. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Berendsen