Disposal of Wincanton Records Management

RNS Number : 4860E

Wincanton PLC

04 November 2015

 

For immediate release

4 November 2015

Wincanton PLC

('Wincanton' or the 'Group')

Disposal of Wincanton Records Management operations in the UK and Ireland

Wincanton plc, a leading provider of supply chain solutions in the UK and Ireland, today announces that it has signed a conditional agreement to dispose of the operations of Wincanton Records Management ("WRM") to Restore plc ("Restore") for an enterprise value of £60m, on a cash and debt free basis (the "Disposal").

Background and Rationale:

·   WRM provides a full suite of document storage and associated scanning and shredding services. With over 14 years of experience and operations covering the whole of the UK, as well as having a significant presence in the Republic of Ireland's records management market, it provides a blue-chip customer base with support for the entire records management cycle. The business currently employs 167 employees who will transfer to Restore upon completion of the Disposal.

·   For the year ended 31 March 2015 WRM generated EBITDA (Earnings Before Interest, Tax, Depreciation and Amortisation) of £5.4m and operating profit of £3.5m on total revenue of £22.4m.  As at 31 March 2015 gross assets were £22.2m.

·   The disposal realises material value for the Group and will enhance the focus on the Group's existing logistics operations.

·   The Group will use the proceeds primarily to reduce the average level of net indebtedness to below two times EBITDA. Reducing net indebtedness to below this level is an important step in ensuring the long term stability of the Group for all stakeholders.

Details of the Transaction:

·    The consideration from the Disposal (before transaction costs) will be payable in cash upon completion and will be approximately £55.7m, which is after deductions for retained working capital of £2.4m and certain tax costs of £1.9m. Restore will fund the transaction by means of a placing and a new net debt facility.

·    Restore is one of the UK's leading records management and commercial relocation providers. Restore has two divisions: document management and relocations.  It provides safe and secure services in document storage, online and tape storage, document shredding, office relocation, IT relocation and IT asset disposal. 

·   The transaction is subject to, inter alia, the approval of Restore's shareholders for the proposed placing.

Financial Effects and use of proceeds:

·   The full year impact of the Disposal on the Group's financial performance for the year ended 31 March 2015 would have been a reduction in operating profit of £3.5m and, after the benefits of reduced interest charge, a reduction in profit after tax of approximately £1.3m.

·  Net cash proceeds, after transaction costs, will be used primarily to reduce debt. Under the Group's banking arrangements c. £11m will be due for mandatory prepayment as a result of the transaction. A contribution of £7m will be made to the Wincanton Pension Scheme from the proceeds. The remaining proceeds will be used to further reduce net bank indebtedness.

·   The Board's focus on reduction of net debt has resulted in a balance of £57.6m as at 31 March 2015, down from £107.6m as at 31 March 2013. Across the same period average net debt has fallen from £201m for the year ended 31 March 2013 to £136m in the year ended 31 March 2015. It is expected that as a result of the transaction the ratio of average net debt to EBITDA will reduce to under two times which is an important step for the Group.

Adrian Colman, Chief Executive of Wincanton commented:

"The disposal of WRM realises material value for the Group and allows us to make significant progress in reducing average net indebtedness, strengthening our balance sheet and providing greater capacity for future investment. Wincanton will be stronger, with a clear focus on its core skills and capabilities in logistics operations.

Restore has a strong reputation in the records management business. I would like to thank all of our WRM colleagues for their dedication, professionalism and service to our customers, which has resulted in the creation of a great business. I am confident that the agreement we have reached with Restore presents an exciting opportunity for their continued success."

For further information please contact:

Wincanton plc           Adrian Colman, Chief Executive Officer Tim Lawlor, Chief Financial Officer	01249 710 000
Buchanan Richard Oldworth, Gabriella Clinkard, Jane Glover	020 7466 5000
Rothschild                                                                                                            Stuart Vincent, Niall McBride, Sabina Pennings	020 7280 5000
Numis Securities                                                                                                 Mark Lander	020 7260 1000

 

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