TIDMMAN
RNS Number : 9644Y
Manroy PLC
01 March 2013
01 March 2013
MANROY PLC
Acquisition of trade and assets of Base Enamellers Ltd
("Base")
and purchase of assets of RJL Engineering ("RJL")
Manroy Plc ("Manroy" or the "Group"), the AIM quoted UK defence
contractor, today announces the acquisition of the trade and
certain of the assets of Base and certain of the assets of RJL for
a total aggregate cash consideration of GBP0.8m.
Highlights:
-- Acquisition of a strategic GPMG supplier
-- Addition of new high end manufacturing capabilities to the Group
-- Possibility of synergistic costs savings to the Group through
the internal manufacture of the Group's mounts, tow-bars, tripods
and a majority of key GPMG components
-- Financed through increase of bank facilities which have been
restructured to give the Group more working capital
post-acquisition
Glyn Bottomley, Chief Executive of Manroy, commented: "The
acquisition of Base and RJL will bring many tangible benefits to
the Group in both the short and long term. This is an excellent
strategic and cost effective acquisition for the Group which we
anticipate will immediately enhance our capabilities and result in
cost savings."
Following Manroy's successful expansion of its product range
into the General Purpose Machine Gun ("GPMG") market, the Directors
have concluded that it is beneficial for the Group to extend its
operational and manufacturing capability. The Directors believe
that this acquisition will result in synergistic savings as a
result of a lower cost of manufacture.
Base was formed in 1972 and has grown into an established high
precision engineering company located in Erith, Kent, where it will
continue to operate after the acquisition. Base currently employs
19 people and is currently owned by Roger Topliffe (founder) and
Damon Batstone. Roger will retire following the acquisition and
Damon will continue to manage the new subsidiary Base (Manroy)
Limited's operation within the Group.
Base offers a one stop manufacturing solution and has a complete
CNC milling and turning facility which is complemented by highly
capable and sophisticated paint spraying centres. The extended
capabilities that will be brought within the Manroy Group as a
result of the acquisition include: Surface Grinding; Spray
Painting; Alocrom; Anodising; Chroming and pre-treatments; as well
as engraving and silk screening. For the year ended 30 September
2012, revenue for Base was GBP2.0m of which approximately 50%
related to sales made to Manroy.
For the past two years Base has been working with Manroy as a
strategic supplier on significant manufacturing elements of the
GPMG production programme. This partnership followed good
manufacturing sub-contract support provided by Base on other
smaller production requirements, such as lightweight tow bars,
lightweight tripods for the MoD, and other weapon mounting solution
products sold by the Group. Base's contribution to the GPMG
development programme has proved to be invaluable to the Group's
delivery performance to its customer base.
When Manroy commenced acquisition negotiations with Base, Base
had already begun the process of acquiring the assets of RJL. RJL
is located next to Base and provides a high proportion of
sub-contract supply directly to Base. Having reviewed this
proposal, the Directors considered that the acquisition of RJL
would be beneficial to Base and, in turn, the enlarged Group.
Both Base and RJL bring with them key employees who possess
expertise in both large scale production engineering and experience
to complement GPMG production.
These two acquisitions will result in all manufacturing for the
Group's mounts, tow-bars, tripods and a majority of key GPMG
components, being manufactured within the Group. As a result this
will improve manufacturing controls and efficiencies which is
expected by the Board lead to result in cost savings for the Group.
In addition, Base and RJL bring additional revenue and customers
from their own customers as original equipment manufacturers
("OEM") as well as other UK based customers within the defence
sector.
The acquisition of Base has been financed through restructured
bank facilities that have also increased the Group's available
working capital. The restructured facilities provide the Group with
a GBP2.1m loan repayable over three years and an increase in the
Group's overdraft facility to GBP1.0m. These new facilities are
secured by standard bank debentures and securities given by the
Company and its subsidiaries.
Ends.
Contacts:
For further information please contact:
Manroy Plc Tel: 01252 874 177
Glyn Bottomley, Chief Executive
Paul Carter, Finance Director
Allenby Capital Tel: 020 3328 5656
Mark Connelly
Alex Price
Bankside Consultants Tel: 020 7367 8888
Richard Pearson
Simon Rothschild
Notes to Editors:
1. Manroy is a UK based defence contractor specialising in the
supply of weapon systems for land, air and maritime
applications.
2. A key Ministry of Defence supplier for 26 years, Manroy
designs, manufactures, supplies and supports:
-- the 12.7mm M2 Heavy Machine Gun ("HMG"), also known as the 0.50" calibre HMG;
-- the 7.62mm General Purpose Machine Gun ("GPMG");
-- HMG Quick Change Barrel kits;
-- a range of turret products for armoured fighting vehicles;
-- weapon tripods and weapon mounting systems
3. Production of the HMG, along with support and spares is
Manroy's core area of operation. In recent years Manroy has
increasingly focused on the export market and diversification of
its customer base into new territories.
4. Manroy owns 49% of North Carolina based Manroy USA ("MUSA"),
a defence supplier to both military and civilian agencies.
5. MUSA manufactures a range of weapons systems and ancillary products, including:
-- The M2 HMG
-- M2 HMG Quick Change Barrel kits
-- Barrel manufacturing for both the military and commercial markets
-- M16 and M4 military rifles
-- Electronic boresights
-- Mounting systems
-- Commercial rifles and parts
6. MUSA's acquisition of the business and assets of Sabre
Industries in March 2011 enhanced its penetration of the US
market.
7. In April 2012, $10.4m (GBP6.6m) of Sabre's contracts with the
US Department of Defense were successfully novated to MUSA.
The Group adheres strictly to UK legislation concerning the sale
of weapons to foreign countries. Manroy's overseas sales are
undertaken in adherence to UK Government regulations and approvals.
Such sales are only undertaken after all appropriate UK Government
licenses have been granted.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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