Acquisition

RNS Number : 0857J

Senior PLC

01 April 2015

 



Acquisition of Lymington Precision Engineering

Senior plc ("Senior" or "the Group") is pleased to announce that it has acquired 100% of the issued share capital of Lymington Precision Engineering (LPE) Limited ("LPE" or "the Company"), from management and Vine Street Capital, for an initial consideration of £45.8m on a debt free/cash free basis.  This was all paid in cash on completion of the acquisition.

Additional "earn-out" consideration of up to £31.7m is potentially payable, dependent upon the financial performance of LPE during the 12 month period ending 31 March 2016.  £10.0m of the earn-out consideration was paid into escrow upon acquisition.

LPE is a leading manufacturer of precision-machined components, fabrications, assemblies and kit sets for the oil and gas, telecommunications, aerospace, defence, land and sea systems, nuclear and marine industries.

The Company is based in Lymington, Hampshire, UK and employs 225 people.  It has been operating for over 30 years and has 121,000 sq. ft. of manufacturing space equipped with the latest manufacturing technology.  This includes numerous multi-axis CNC machines, with turning and milling capability up to 4 metres in length and flexible manufacturing systems capable of unmanned working to produce components to close tolerances 24 hours per day.

LPE will form part of Senior's Flexonics Division with the current management team staying with the business following acquisition.

For the year ended 31 March 2014, LPE reported sales of £42.7m and trading profit before interest, tax, depreciation and amortisation ("EBITDA") of £7.0m.  For the year ending 31 March 2015, LPE expects to report sales of £51.2m and EBITDA of £9.0m.  Gross assets of the business at 31 March 2014 were £25.4m.

The acquisition will be funded using the Group's existing borrowing facilities, a new two-year £20m revolving credit facility and new one-year term loans totalling £25m.

Due to the current short-term uncertainties in the oil and gas market, which accounts for 85% of LPE's sales, the financial performance of the Company is expected to be materially lower over the next twelve months than that experienced in the recent past.  The acquisition is, however, still expected to be immediately earnings enhancing.  Following the acquisition, sales to the oil and gas sector will represent approximately 5% of Group revenue.

LPE's impressive capabilities and customer focus, together with contracted growing revenue from existing nuclear, marine and aerospace customers, mean the Company's future prospects are encouraging.  In addition, LPE is very well-positioned to benefit from a recovery in the oil and gas industry when it comes.

Commenting on the acquisition, Mark Rollins, Senior's Group Chief Executive, said:

"I am very pleased to announce the acquisition of LPE and to welcome all of its employees to the Group.  LPE represents an excellent addition to Senior's portfolio, strengthening the Group's precision machining capabilities and providing access to LPE's strong customer relationships and adjacent markets.  Combined with Senior's wider market access and financial strength, LPE represents an excellent platform to enhance the longer-term growth prospects for the Senior Group."

Further information

Mark Rollins	Group Chief Executive, Senior plc	[phone]
Derek Harding	Group Finance Director, Senior plc	[phone]
Philip Walters	RLM Finsbury Group	[phone]

About Senior

Senior is an international manufacturing Group with operations in 14 countries.  It is listed on the main market of the London Stock Exchange (symbol SNR).  Senior designs, manufactures and markets high technology components and systems for the principal original equipment producers in the worldwide aerospace, defence, land-vehicle and energy markets. Further information on Senior plc may be found at: www.seniorplc.com

About LPE

A privately held company, LPE has been a leading manufacturer of precision machined components, fabrications, assemblies and kit sets for many industries for over 30 years.  Further information on LPE may be found at: www.lymingtonprecision.co.uk

Cautionary Statement

This announcement contains certain forward-looking statements.  Such statements are made by the Directors in good faith, based on the information available to them at the time of the announcement, and they should be treated with caution due to the inherent uncertainties underlying any such forward-looking information.

 

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