TIDMBILB
RNS Number : 9150S
Bilby PLC
13 July 2015
13 July 2015
Bilby Plc
("Bilby" or the "Company")
Acquisition of Purdy Holdings Limited for a total consideration
of GBP8.07 million
Placing to raise GBP2.95 million for the Company
Dealings by Directors
Bilby Plc (AIM: BILB.L), the holding company for P&R
Installation Company Limited ("P&R"), a leading gas heating and
building services provider, has today announced that it has
acquired the entire issued share capital of Purdy Holdings Limited
("Purdy Holdings") for a total consideration of GBP8.07 million
(the "Acquisition"). Purdy Holdings is a privately owned property
services business based near Waltham Abbey, Essex.
The consideration is to be satisfied by way of an initial cash
payment of GBP6.57 million together with the issue of 1,250,000 new
Bilby ordinary shares at a price of 80 pence per share (the
"Consideration Shares") and the issue of a GBP0.50 million
Convertible Loan Note (the "Loan Note"). The Acquisition has been
funded through a new term loan of GBP4.20 million and a mortgage
loan of GBP570,000 from HSBC Bank plc together with a share placing
to raise a further GBP2.95 million for the Company. The share
placing was arranged by Charles Stanley Securities and has been
heavily oversubscribed. To satisfy market demand certain directors
and other existing shareholders (the "Selling Shareholders"), have
agreed to place 1,500,000 ordinary shares as part of the share
placing (the "Placing").
The Placing therefore comprises the issue of 3,687,500 new Bilby
ordinary shares (the "New Shares") and 1,500,000 existing Bilby
ordinary shares (the "Sale Shares") at a price of 80 pence per
share which represents a discount of approximately 5.9 per cent to
the Bilby closing mid market price on 10 July 2015 of 85 pence. The
New Shares and the Sale Shares (the "Placing Shares") have been
placed with institutional and other investors including Mr David
Johnson, non executive director, who has purchased 25,000 Placing
Shares.
Purdy - overview
Through Purdy Contracts Limited ("Purdy"), the sole subsidiary
of Purdy Holdings, the group operates predominantly as a gas and
electrical contractor and is based near Waltham Abbey, Essex. Purdy
was established in 1984 as a gas and electrical maintenance and
installation contractor. Today Purdy carries out all types of gas
and electrical work to both commercial and domestic markets,
predominantly focused on social housing and local authority
customers.
Purdy provides maintenance services to in excess of 30,000
properties located throughout London, the Home Counties and South
East England. Purdy works closely with a number of local
authorities and housing associations including Homes for Haringey,
the London Borough of Enfield, Aston Group, Central Bedfordshire
Council and Hyde Housing. Purdy has also undertaken contracted work
for the Salvation Army Housing Association located across
England.
Purdy has been notified that it has been awarded two potentially
material new contracts which are expected to commence shortly. The
first is to undertake annual electrical testing, servicing and
reactive works to all properties owned by Peabody Housing. Purdy is
also undertaking a pilot project with the London Borough of Barking
and Dagenham to install kitchens and bathrooms and to undertake
associated mechanical and electrical works. Upon completion of the
pilot project Purdy expects to be awarded a new four year
contract.
Purdy employs 182 full time staff. The experienced management
team is led by owner and Chairman Mr John Horlock.
Further information on Purdy can be found at
www.purdycontracts.co.uk.
Purdy - financial information
Purdy Holdings reported consolidated group revenues for the year
ended 31 December 2014 of GBP14.00 million (2013: GBP15.68
million). Adjusted profit before tax for the year ended 31 December
2014 was GBP411,000 (2013 GBP949,000) being the reported group
profit before tax adjusted for the impact of amortisation of
goodwill arising on consolidation which will not occur under
IFRS.
Purdy Holdings currently prepares annual accounts in accordance
with UK GAAP. Bilby reports under IFRS. Following the acquisition,
Purdy Holdings will also report under IFRS. As such, the charge of
GBP368,000 in relation to amortisation of goodwill arising on
consolidation reflected in Purdy Holdings' 2014 UK GAAP group
accounts will not be charged under IFRS but instead the goodwill
asset will be reviewed annually for impairment. It should be noted
that a formal exercise has not yet been undertaken to consider
whether an impairment charge will be appropriate in relation to any
intangible assets carried on the Purdy Holdings balance sheet under
IFRS.
Normalised profit before tax for the year ended 31 December 2014
has been calculated as GBP1,096,000 being the adjusted profit
before tax as stated above but also adjusting for staff
restructuring costs, directors' remuneration which will not be
incurred after December 2014 and the contribution in relation to
the termination of an onerous commercial contract.
Group UK GAAP net assets of Purdy Holdings as at 31 December
2014 were GBP7.14 million (2013: GBP7.39 million), with cash
balances of GBP287,000 (2013: GBP1,045,000). The net assets
comprised goodwill with a net book value of GBP4.89 million (2013:
GBP5.26 million) and trading net assets of GBP2.25 million (2013:
GBP2.13 million). When prepared under IFRS, based on no other
adjustment than the unwinding of the previously charged
amortisation in respect of the goodwill, the directors estimate
that the IFRS net assets at 31 December 2014 would have been
GBP9.62 million at 31 December 2014, comprising trading net assets
of GBP2.25 million and goodwill of GBP7.37 million.
Acquisition rationale
The Directors believe that the acquisition of Purdy represents
an expansion of services and geographical scope which is
complementary to P&R. P&R provides gas maintenance
installation and building maintenance services to housing
associations predominantly within South East London. In addition to
heating and building services, Purdy offers complementary
electrical services including repair and maintenance testing,
rewiring and system upgrades and operates in neighbouring boroughs
in North East London, as well as Essex, Hertfordshire and
Suffolk.
The enlarged group will benefit not only from the increase in
scale and presence of its operations, but will enable it to qualify
to tender for larger contracts which have minimum pre-qualification
revenue requirements. The two businesses will continue to operate
under their respective brands and will also benefit from the
increased purchasing power and the strong financial position of the
enlarged Bilby group.
Terms of the Acquisition
The Company has conditionally acquired the entire issued share
capital of Purdy Holdings for a total consideration of GBP8.07
million. The consideration is to be satisfied by way of an initial
cash payment of GBP6.57 million together with the issue of
1,250,000 Consideration Shares at a price of 80 pence per share and
the issue of a GBP0.50 million Loan Note.
The Consideration Shares are to be issued to the vendor, Mr
Horlock and are subject to a lock-in agreement until 6 March 2016.
The Consideration Shares will rank pari passu with the existing
ordinary shares. The Consideration Shares will represent
approximately 3.6 per cent of the enlarged issued share
capital.
The Loan Note is payable on the second anniversary of completion
of the Acquisition. Mr Horlock has the ability to elect to convert
the payment into new Bilby ordinary shares at a price per share,
which represents the higher of 80 pence per share or the average
closing mid market price for the 60 business days before the
relevant payment date.
The Acquisition is conditional upon admission of the
Consideration Shares and the Placing Shares to trading on AIM
("Admission").
Banking Facility
The Acquisition has been funded through a new term loan of
GBP4.2 million and a mortgage loan of GBP570,000 from HSBC Bank
plc, together with a share placing to raise a further GBP2.95
million, details of which are set out below.
The term loan runs to July 2020 and is repayable over the period
of the loan, while the mortgage runs to July 2025.
Details of the Placing
The Placing will raise gross proceeds of approximately GBP2.95
million for Bilby through the issue by the Company of 3,687,500 New
Shares and will raise GBP1.20 million for the Selling Shareholders
through the placing of the Sale Shares.
The Placing Price represents a discount of 5.9 per cent. to the
closing mid market price of 85 pence per share on 10 July 2015,
being the last practicable date prior to the announcement of the
Placing.
The Placing is conditional upon:
-- the Placing Agreement becoming unconditional in all respects
and not having been terminated in accordance with its terms;
and
-- Admission.
The allotment of the New Shares (and the Consideration Shares)
can be accommodated within the existing Shareholder
authorities.
The Placing Shares have been placed with certain new and
existing institutional and other investors. This includes Mr Gary
Bruce, a director of Purdy, who has subscribed for 250,000 Placing
Shares, representing approximately 0.7 per cent of the enlarged
issued share capital. In addition, Mr David Johnson, a non
executive director of the Company, has subscribed for 25,000
Placing Shares representing 0.1 per cent. of the enlarged issued
share capital and which is his total interest in the share capital
of the Company.
The New Shares represent, in aggregate, approximately 12.6 per
cent. of the Company's existing issued share capital and
approximately 10.8 per cent. of the issued share capital of the
Company immediately following completion of the Acquisition and the
Placing.
The Directors and other selling shareholders are subject to a
lock-in agreement entered into at the time of the Company's
admission to trading on AIM in March 2015. Charles Stanley
Securities has agreed to release certain of the directors and other
shareholders from the lock-in arrangements to the extent necessary
to complete the Placing.
The Directors disposing of shares pursuant to the Placing
are:
Residual Percentage
Shareholding holding
Sale Shares at Admission at Admission
----------------- ------------ -------------- --------------
Philip Copolo 750,000 14,476,896 42.3%
----------------- ------------ -------------- --------------
David Ellingham 250,000 2,250,000 6.6%
----------------- ------------ -------------- --------------
Darren Dunnett 250,000 2,250,000 6.6%
----------------- ------------ -------------- --------------
With the exception of Philip Copolo, David Ellingham, Darren
Dunnett and David Johnson who are involved in the Placing as
related parties, Sangita Shah, non executive Chairman, considers,
having consulted with the Company's nominated adviser, that the
terms of the Placing are fair and reasonable insofar as its
shareholders are concerned.
Application has been made for the Consideration Shares and the
New Shares to be admitted to trading on AIM and it is expected that
Admission will take place on 14 July 2015. The Consideration Shares
and the New Shares will, when issued, be credited as fully paid and
will rank pari passu in all respects with the existing ordinary
shares, including the right to receive the final dividend of 2.32p
per share which, if approved at the forthcoming Annual General
Meeting, will be paid on 28 August 2015. The issue of the Placing
Shares was made on a non pre-emptive basis.
Following Admission of the Consideration Shares and the Placing
Shares, the total issued share capital of Bilby will comprise
34,247,845 ordinary shares. The figure of 34,247,845 ordinary
shares may be used by shareholders as the denominator for the
calculations by which they will determine if they are required to
notify their interest in, or a change to their interest in, Bilby
under the Disclosure and Transparency Rules.
Commenting on the acquisition, Phil Copolo, Deputy Executive
Chairman of Bilby, said,
"Bilby Plc joined the AIM market with a buy and build strategy
and the acquisition of Purdy is a perfect fit. Critically it
enables us to tender for larger contracts, whilst broadening the
Company's service offering as well as providing a number of
opportunities to drive customer and procurement synergies. I have
been impressed by the quality, energy and vision of the management
team at Purdy and I look forward to working with them to further
develop and grow both their and the Bilby business."
John Horlock, Chairman of Purdy Holdings, remarked,
"This transaction marks a new chapter in the history of the
Purdy business. I am confident that being part of Bilby will enable
us to accelerate the strong progress we have made over the last few
years."
Bilby Plc 020 8269 3777
Phil Copolo, Deputy Executive Chairman
David Ellingham, Finance Director
Charles Stanley Securities
020 7149 6000
(Nominated Adviser and Broker)
Russell Cook
James Greenwood
Hudson Sandler
020 7796 4133
(Financial PR)
Charlie Jack
Emily Dillon
Alex Brennan
Note for Editors
Bilby Plc, the holding company for P&R Installation Company
Limited ("P&R"), was established to provide a platform for
strategic acquisitions in the gas heating and building services
industries. Bilby's first acquisition was P&R, an established
and award winning provider of gas heating appliance installation
and maintenance services.
P&R provides services predominately to local authorities and
housing associations across London and South East England and is
responsible for over 100,000 properties. The experienced management
team places emphasis on the provision of a high level of service
through which P&R has developed long standing relationships
with its customers who include the Guinness Partnership, London
& Quadrant, Gallions and the Royal Borough of Greenwich.
Headquartered in Sidcup, Kent, P&R employs approximately 120
staff, including sub-contractors. Bilby Plc (AIM: BILB.L), is
traded on the AIM Market of the London Stock Exchange. For further
information, visit www.Bilbyplc.com.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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