TIDMAUG
RNS Number : 6684Y
Augean Plc
19 May 2016
19 May 2016
Augean plc
("Augean" or "the Group")
Acquisition of Colt Holdings Limited
Augean, one of the UK's leading specialist waste management
businesses, is pleased to announce that it has acquired the entire
issued share capital of specialist industrial services provider,
Colt Holdings Limited and its wholly owned subsidiary, Colt
Industrial Services Limited (together "Colt") (the
"Acquisition").
Highlights
-- Initial consideration of GBP9.2 million, net of GBP4.5
million of cash acquired, as adjusted for a normalised level of
working capital, with the business acquired free of borrowings;
-- Additional potential earn-out based payments of up to GBP4.75
million, subject to Colt securing certain contracts;
-- Audited revenue and EBITDA of Colt for the year ended 31
December 2015, on a proforma(*) basis, were c. GBP7.1 million and
c. GBP1.4 million, respectively;
-- Colt to enhance Augean's Industry & Infrastructure
business unit, adding UK-wide industrial services coverage and
complementing the Group's existing service, treatment and disposal
infrastructure;
-- Acquisition funded from existing debt facilities and is
expected to be immediately earnings enhancing.
Background to and rationale for the Acquisition
The Group established its core strategy at the start of 2014,
with a focus on growing shareholder value by developing sustainable
market positions through:
-- Building competitive advantage by working with customers to
provide innovative solutions, to deliver specialist services
focused on hazardous waste;
-- Driving further profitable growth and returns by increasing
the proportion of Group revenues derived from service offerings to
our hazardous waste customers; and
-- Improving the forward visibility of revenue by progressively
moving more of the Group's revenues from 'spot' or short-term
contracts to long-term contracts and frameworks.
The progressive improvements in the Group's financial
performance over the last two years demonstrate the traction of
this growth strategy that has been achieved organically. The Group
has previously indicated its intention to accelerate the delivery
of this strategy by acquiring businesses that provide clear
operational and market synergies in its key market sectors, with
the undertaking that any such investments, whether organic or
through acquisition, grow the asset base of the Group and provide
superior returns for shareholders.
Profile and strategic fit of Colt
Based in Hull and established over 25 years ago, Colt provides a
broad range of industrial services, which complement Augean's
existing service offering, to a range of customers including major
industrial companies, oil refineries, rail and utilities. These
activities include, inter alia:
-- Specialist tank cleaning and high pressure jetting;
-- Hydro abrasive cutting;
-- Asbestos removal; and
-- Waste management and tanker haulage.
Through its Industry & Infrastructure and Augean North Sea
Services business units, Augean has significant waste treatment and
disposal infrastructure alongside a growing capacity for delivering
client site industrial services. The Acquisition of Colt is in line
with the Group's strategy and enhances its offering with:
-- UK-wide coverage of specialist industrial services that
complement and expand the Group's existing service, treatment and
disposal infrastructure;
-- Customer relationships, typically framework agreements, with
top-tier companies that have a requirement for hazardous waste
disposal, providing opportunities for cross-selling of the Group's
broader offerings;
-- Expertise as an acknowledged leader and innovator in the
specialist technical aspects of industrial cleaning, such as tank
and heat exchanger cleaning;
-- A fleet of specialist vehicles and equipment that are
incremental and complementary to that currently operated by the
Group; and
-- Opportunities for synergies to be realised from
cross-selling, waste disposal and deployment of the fleet across
the enlarged Group.
Financial terms
Colt has been acquired for an initial cash consideration of
GBP9.2 million, net of GBP4.5 million of cash acquired, as adjusted
for a normalised level of working capital, and with no borrowings.
This was funded through the Group's existing borrowing facilities,
following the renewal and refinancing of its bank facilities in
March 2016.
Further consideration, of up to a maximum of GBP3.75 million,
may become payable by October 2017, along with further
consideration of up to GBP1 million, payable by October 2018,
subject to Colt securing specific additional contracts in the
coming months. Those contracts would be of significant value to the
enlarged Group should they be secured. Any such further
consideration payments would be funded through the Group's
borrowing facilities.
The Acquisition is expected to be immediately accretive to
earnings per share.
The audited revenue and profit before tax of Colt, on a
proforma(*) basis, were c. GBP7.1 million and c. GBP1.1 million,
respectively, for the year ended 31 December 2015. The EBITDA of
Colt, on the same basis, was c. GBP1.4 million.
The book value of the net assets of Colt, on a proforma(*)
basis, was c. GBP7.0 million as at 31 December 2015.
As part of the Acquisition, all 75 Colt employees will be
transferred to the Group, including certain key executives, who
will remain in the business under service agreements.
(*) Proforma figures provided for the Colt Holdings Limited
Group are for the businesses and assets being acquired and exclude
certain elements of that group not acquired by Augean.
Dr Stewart Davies, Chief Executive Officer, commented:
"We are delighted to announce the acquisition of Colt as we
continue to strengthen Augean's position in the UK hazardous waste
management market. The acquisition is immediately earnings
enhancing and creates synergies with our existing service offering,
enabling the Group to address a wider breadth and depth of client
needs and adding new top-tier clients. It also accelerates our
strategy to grow shareholder value by developing sustainable market
positions and providing customers with innovative solutions."
For more information please contact:
Augean plc
Dr Stewart Davies, Chief
Executive Officer
Richard Laker, Group Finance
Director 01937 844 980
Altium
Financial advisor to Augean
Adrian Reed
Paul Lines 0845 505 4343
N+1 Singer
Nominated Advisor and
Broker to Augean
Shaun Dobson
Richard Lindley
Jennifer Boorer 020 7496 3000
FTI Consulting
Financial PR advisor to
Augean
Oliver Winters
Adam Cubbage
Fiona Walker 020 3727 1614
More information is available on our website
www.augeanplc.com
This information is provided by RNS
The company news service from the London Stock Exchange
END
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