1st Jun 2005 07:03
Tellings Golden Miller Group PLC01 June 2005 Tellings Golden Miller Group plc ("Tellings Golden Miller" or the "Company") Proposed disposal of London Bus Division Introduction The Board of Tellings Golden Miller announces that it has agreed, conditionalinter alia upon Shareholder approval at an extraordinary general meeting to beconvened for 9 am on Friday 17 June 2005, to dispose of its London Bus Divisionto West Midlands Travel Limited ("WMT"), a subsidiary of National Express GroupPLC for an aggregate cash consideration of approximately £20.4 million, subjectto adjustment. Background to and reasons for the Disposal At the time that the Company was admitted to AIM in August 2003, among the keyobjectives of the Board was to grow and develop the Group's London bus operationby tendering for additional routes that could be operated out of the Group'sexisting depots, and to seek to acquire existing TfL operators in areas ofLondon where the Group did not operate in order to extend the Group's depotnetwork and provide a basis for tendering for further routes. The Group has looked to acquire a number of smaller independent TfL operatorsbut has not concluded these deals either because of issues arising in the courseof due diligence or as a result of the Board's decision that it was not preparedto pay above what it believed to be sensible acquisition prices. A number of other factors have also adversely affected the London bus marketgenerally since the Company's flotation. Key among these has been rising Londonemployment costs which are having the effect of constraining gross margins.Additionally, with the influx of larger operators into the London market, asmaller operator such as Tellings Golden Miller is likely to find itincreasingly difficult to win new routes. These factors led the Board to conclude that it should review whether theCompany could realise better returns for Shareholders by disposing of the LondonBus Division than it was likely to earn from continuing as a London busoperator. Taking into account the perceived risks and rewards, the Board concluded thatthe offer to acquire the London Bus Division received from WMT provided anattractive option for Shareholders. The Board plans a period of reorganisation and consolidation of its residualoperations during the remainder of 2005. Following the Disposal, the Group'sstrategy will be to increase our focus as a national operator, meeting the needsof large and small clients. The Board sees significant opportunities for growthin its regional coach and bus businesses in 2006 and beyond by acquiringcomplementary businesses and extending existing contracts with its strong clientbase. Terms of the Disposal The Group's London Bus Division is operated through two wholly ownedsubsidiaries, Tellings Golden Miller Buses and Tellings Golden Miller Middlesex.Under the terms of the Disposal Agreement, the Company will sell the whole ofthe issued share capital of Tellings Golden Miller Buses and Tellings GoldenMiller Middlesex to WMT for an aggregate cash consideration of approximately£20.4 million, subject to adjustment. The Disposal includes the sale of theCompany's Surrey-based operation, based at Byfleet. The consideration is subjectto upward or downward adjustment on a pound-for-pound basis to the extent thatthe net current assets/liabilities (subject to certain adjustments) of TellingsGolden Miller Buses and Tellings Golden Miller Middlesex as at the date ofcompletion as determined by completion accounts are greater than or less thanzero. In the financial year ended 31 December 2004, turnover of the London BusDivision was £23.9 million, operating profit was £2.1 million and net assetswere £4.8 million. Based on these figures, the consideration for the Disposal,assuming no adjustments are made, represents a multiple of 0.85 times turnover,9.7 times operating profit and 4.2 times net assets. The consideration of approximately £20.4 million represents a sum ofapproximately 89 pence per Existing Share. The Disposal is conditional upon Shareholders' approval at an extraordinarygeneral meeting of the Company's Shareholders to be convened for the purpose. Transitional arrangements relating to the Disposal The Disposal will involve the physical separation of the London Bus Divisionfrom the Group's coach division at the Company's Twickenham and Hayes depots,and will also require the Group to move its head office from its current site atFulwell to a new site, yet to be identified. In order to effect this separation with a minimum disruption to both businesses,a transitional services plan has been agreed detailing the transitionalarrangements that will be put in place. Information on the remaining businesses Following the Disposal, the remaining business of the Group will comprise: • Tellings Golden Miller Coaches: operates 30 luxury coaches from its Twickenhambase for all types of coach hire throughout Great Britain and Europe; • Tellings Golden Miller Crew Operation: operates at Heathrow Airport andprovides transport for aircrew from the airport to and from London andsurrounding areas for over 40 major airlines; • National Express coach operation: Tellings Golden Miller Coaches Limitedoperates as a subcontractor to National Express Group PLC from its depot atPortsmouth; • Burtons: a coach and bus operator based in East Anglia operating out of fourdepots. Burtons operates as a subcontractor to National Express Group PLC and,in addition, also undertakes coach and local bus work in East Anglia; • Classic Coaches: a national coach and bus operator based in Newcastle.Classic's main business is providing luxury coaches for educational tours toEurope on behalf of major educational travel companies. Classic is also asubcontractor to Nexus, with approximately 45 buses operating under contract; • Linkline: a coach operator based in West London, primarily servicing the BBCand Thames Valley University together with a major incoming Scandinavian touroperator. Linkline also undertakes local private hire. In the year to 31 December 2004, turnover from these operations totalled £14.5million, operating profit was £1.3 million and net assets employed were £5.0million. Use of proceeds of Disposal and special interim dividend The majority of the cash proceeds arising from the Disposal will be paid toShareholders by way of a special interim dividend. The Board has today announceda special interim dividend of 60 pence per Existing Share. The payment of thespecial interim dividend will represent the payment by the Company toShareholders of an aggregate cash sum of approximately £14 million, assuming nooptions are exercised by option-holders. A timetable setting out the dates for entitlement to the special interimdividend and the payment date will be announced as soon as practicable by theCompany. The balance of the proceeds of Disposal will be retained by the Company and willbe used to repay bank indebtedness and provide additional working capital forexpansion of the Group's interests. Current trading and prospects Progress in 2005 has been satisfactory in both the Group's bus and coachdivisions. Shareholder Circular Later today, a circular setting out further details relating to the Disposal andconvening the extraordinary general meeting is being posted to Shareholderstogether with the Annual Report and Accounts of the Company for the 12 monthsended 31 December 2004. All defined terms used in this announcement carry the meanings attributed tothem in the circular to be sent to Shareholders later today. There will be a presentation for analysts at 9:30am on Thursday 2 June atCollege Hill Associates, 5th floor, 78 Cannon Street, London EC4. If you wishto attend, please contact Emma Nunn at College Hill on 020 7457 2020 or respondvia e-mail to emma.nunn@collegehill.com. Commenting on the Disposal, Stephen Telling, Chairman of Tellings Golden MillerGroup plc said: "I am delighted to have secured an attractive price for the saleof our London Bus Division and to be able to return a substantial cash sum toour shareholders. Our remaining business offers good potential for growth and welook forward to enhancing shareholder value in the coming years." Enquiries: Tellings Golden Miller Group plc Tel: 020 8755 7050 Stephen Telling (Chairman) Robert Hodgetts (Finance Director) College Hill Tel: 020 7457 2020 Matthew Gregorowski City Financial Associates Limited Tel: 020 7090 7800 Tony Rawlinson Oriel Securities Limited Tel: 020 7710 7600 Andrew Edwards This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
NEX.L