ASX An nnouncem ment Seymour Whyte W Limite ed AC CN 105 493 20 03
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18 Febru uary 2014 SEYMO OUR WHYTE E TO ACQU UIRE CIVIL L CONSTRU UCTION SPE ECIALIST, ROB CARR R PTY LTD Infrastru ucture engin neering and construction n group, Sey ymour Whytte Limited (A ASX: SWL) today t announcced that it iss to acquire Rob Carr Ptty Ltd (RCPL L), a privately owned civvil constructiion businesss, for $27.5 million in ca ash and the issue of 9.6 6 million SWL L shares. HIGHLIIGHTS S SWL to acqu uire civil con nstruction an nd micro-tun nnelling spec cialist, Rob C Carr Pty Ltd for $ $27.5 million n in cash an nd 9.6 million n new SWL shares
S SWL has exe ecuted a conditional bin nding Headss of Agreeme ent to acquirre RCPL with a few cconditions precedent. p Completion C o of the acquiisition is anticipated to ooccur before e midMarch 2014 as the parties work tow ward agreein ng and signing definitivee legal d documentattion.
T The acquisittion of RCPL L will align w with SWL’s sttrategy for growth g throuugh geograp phic and ssector diversification: − New w regions: RC CPL (establisshed 1989) currently op perates in W Western Austtralia, Que eensland and d New South h Wales, add ding to curre ent presencee while open ning up oppo ortunities in new region ns − Expa anded produ uct offering: Complementary civil co onstruction ccapabilities in microtunn nelling, pump stations a nd pipeliness in the wate er and poweer industries create an opportunity o to t offer expaanded produ uct portfolio to combineed customer base − New w sectors: RC CPL’s custom mer base and track reco ord in water and power provide SWLL with an entry point to new sectorss − New w projects: SWL’s S balancce sheet pro ovides RCPL with greateer financial capacity to co ompete for larger projeccts in its corre markets
S SWL has forrecast the co ontestable m market for RCPL’s R capab bilities in thee water and power u utilities secttor at approx ximately $4 billion throu ugh to FY2018, and has identified jo oint project oppo ortunities be etween SWLL’s existing operations o and RCPL
A Acquisition will w be NPAT T accretive in n FY2014, and a NPAT/EP PS accretive in FY2015 − Fourr month earnings contri bution to SW WL in FY201 14 − FY20 014 EPS calcculation will include imp pact of new share issue
S SWL provide es updated FY2014 F guid dance reflectting the four-month conntribution off RCPL being conso olidated reve enue $320 m million and NPAT N in the range r of $100 million to $11 million
C Cash consideration will be paid from m SWL’s exissting cash. SWL’s S cash position possta acquisition allows a the Company C to m maintain its 50% NPAT dividend poolicy. SWL ca ash post-consoliidation will be b $35 millio on and is forrecast to exc ceed $50 miillion by end d FY2015
Key acquisittion risks ma anaged by eextensive due diligence and a robust iintegration process: p − RCP PL senior management ((including Ro ob Carr) and d the Rob Caarr brand wiill be retained to main ntain continu uity of custo omer relation nships and ffocus on gro owth − Rete ention plans in place forr senior man nagement − RCP PL will reportt to Seymou r Whyte’s Managing M Dirrector, Davidd McAdam as a a sepa arate busine ess unit of SW WL with cro oss-business focus on jooint project oppo ortunities, cross-marketting, sharing g IP, expertisse and shareed services
Seymou ur Whyte Lim mited
For personal use only
ACN 105 493 3 203
The con nsideration fo or the acquisition of RC PL will comp prise: $ $22.5 million n in cash on n completion n and $5 million in deferrred cash paayments pay yable in FY2015 base ed on the FY Y2014 finan cial perform mance of RCP PL, and T The issue off 9.6 million SWL sharess which will be subject to t escrow reestrictions ov ver periods rang ging FY2014 4 to FY2016 The cash h payments will be mad de from SWLL’s existing cash. c Follow wing the acquuisition, SWL’s cash position will allow th he Company y to maintain n its dividend policy of 50 5 per cent oof NPAT. SW WL’s consolid dated cash position p post-acquisition will be circa a $35 million n and is foreecast to exce eed $50 million b by the end of o FY2015. RCPL wiill contribute e four-month h earnings to o SWL for FY2014 and the t acquisitiion will be accretive to NPAT T. Combined with the efffect of the isssue of new w SWL sharess in FY2014,, this resultss in the transacttion being acccretive to EPS E in FY201 15. Complettion of the acquisition a off RCPL is an nticipated to occur beforre mid-Marchh 2014 as th he parties w work toward ds agreeing and signing definitive le egal docume entation. SWL Ma anaging Dire ector, David McAdam saiid, “Seymou ur Whyte rev viewed moree than 50 po otential acquisitiion targets before b proce eeding with Rob Carr Pty y Ltd. This is an excitingg business that t providess a range of new growth h opportunitties and offe ers a strong alignment oof operating cultures and proffessional competencies..” SWL Cha airman of th he Board of Directors, M Mac Drysdale e reiterated, “Over the yyears we hav ve been building the strengtth of the com mpany throu ugh disciplined performa ance and conntinuing development of cash reserves to t position o ourselves to deliver on our o strategicc plan for geographic and secttor growth. We recognisse the imporrtance of this acquisition in the oveerall growth strategy for the ccompany and therefore have condu ucted a thoro ough due diligence proccess and neg gotiated a fair va alue for the business.” b Rob Carr Pty Ltd RCPL wa as establishe ed in 1989 and a is recog nised as a le eader in und derground ppipe and serv vice installatiions for the energy and water utilitiies markets,, with specia alist capabilitties in pipe construcction, micro--tunneling, deep d shaft aand service installations.. These capaabilities com mplement SWL’s ciivil construction expertisse in the traansport, reso ources and utilities u sectoors. RCPL ow wns a moderrn fleet of micro-tunnell m ling equipme ent and has completed hundreds off kilometrres of conventional and trenchless p pipeline consstruction pro ojects for goovernment custome ers, construcction and ressources com mpanies, and d project alliances. The bussiness has esstablished operations in Queensland d and New South S Waless which will add a to SWL’s position in th hese marketss. RCPL has also operated in Weste ern Australia since 1996 and will leverage e SWL’s expo osure into th his importan nt growth market. RCPL ha as a track re ecord of strong growth, increasing revenue r at a CAGR of appproximately y 20 per cent bettween FY200 08 and FY20 013. The bussiness reporrted FY2013 revenue off $48.4 millio on, EBITDA of $9.4 million and NPA AT of $4.8 m million.
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Seymou ur Whyte Lim mited ACN 105 493 3 203
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Strateg gic rationalle The acquisition will align with SWL’s S strateg gy to grow through t grea ater geograpphic and secctor diversificcation, and creates a ra ange of grow wth opportun nities: New regionss: RCPL will expand SW WL’s footprintt into Western Australia and add to SWL’s e established presence in Queensland d and New South S Waless. Expanded product offerring: Compleementary civ vil construction capabilitties create an a o opportunity to offer an expanded p product portffolio to combined custom mer bases. New sectorss: RCPL’s customer basee and track record in wa ater and pow wer provide an entry point to new w sectors forr SWL. alance sheett provides RC CPL with gre eater financiial capacity to New projectts: SWL’s ba ccompete forr larger proje ects in its co ore markets. SWL hass forecast itss contestable market fo or the curren nt capabilities of RCPL inn the water and power u utilities secto or at approxiimately $4 b billion throug gh to FY2018. This markket generate es superiorr returns to the t civil road d constructio on market and a SWL hass identified jjoint projectt opportunities betwe een SWL’s ex xisting operaations and RCPL. R RCPL’s ttechnical and d technological expertisse represents a significant entry barrrier in the microm tunnellin ng market. The T businesss currently h has an avera age project value v of $1 million to $1 15 million. W With accesss to SWL’s fin nancial capaacity, RCPL will w be stron ngly position ed to compe ete for larger prrojects with an average value of $2 20 million to $50 million in a markett with fewer direct competitors. Busines ss integrattion Mr McAd dam said, “A As this will be b Seymour W n, we conduccted extensiive due Whyte’s first acquisition diligence e on Rob Ca arr Pty Ltd in ncluding perrsonally visiting every cu urrent projecct site. This has allowed us to develo op a tangible understan nding of the business an nd culture, aand to foreca ast joint project o opportunitie es out to FY2 2018.” SWL’s due diligence e included an n extensive work-in-han nd review, a forecast prooject pipelin ne to FY2018 and a five-yyear financia al model. BD DO was enga aged to assist SWL withh specific ele ements of the due diligence e and financiial modelling g work. SWL L also underrtook indepeendent expert reviews of all contra acts and leasses, insuran nce and tax compliance, c as well as i ndependentt assessm ment and valuation of alll plant and eequipment. SWL will retain the RCPL seniorr managemeent team (including Rob Carr) and tthe Rob Carrr brand to ensurre continuityy of custome er relationsh hips and a fo ocus on grow wth. RCPL w will operate as a a separate e business unit u within th he Seymour Whyte Grou up with a focus on jointt project opportunities, crosss-marketing, shared servvices and sh haring IP and d expertise. No net financial synergie es have been n forecast as part of thee integration n plan althou ugh the sharred servicess function n is expected d to realise operating o eff fficiencies. Retentio on plans are in place forr key manag gement of RC CPL. Senior managers inncluding Rob Carr will rece eive fixed rem muneration with short aand long term incentivess.
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Seymou ur Whyte Lim mited ACN 105 493 3 203
For personal use only
Update ed earnings s guidance SWL pro ovides updatted guidance e for FY2014 4 reflecting the four-mo onth contribuution from RCPL. R Forecastt consolidate ed revenue is $320 milliion and NPA AT will be in the range oof $10 million to $11 million. SWL forrecasts contiinued growth in its transsport infrasttructure business and thhe new utilitties infrastru ucture business during FY2015. F Mr McAd dam said, “S Seymour Wh hyte’s first accquisition will w give us significant neew growth opportunities. It will increase qu uality of earrnings through greater sector s and ggeographic diversificcation, and Rob Carr’s technical t and d technological edge in the growingg micro-tunn nelling market.”” “A collab borative app proach to du ue diligence has demonsstrated that Seymour W Whyte and Ro ob Carr share a strong cultu ural alignment that will ssupport our plans for grrowth.”
ENDS For furtther inform mation contact: Caitlin Horgan Commun nication and d Engagement Advisor Seymour Whyte 0400 35 55 448 Caitlin.H
[email protected] About S Seymour Whyte W Seymour Whyte Lim mited is an Australian-ow A wned ASX lissted compan ny providing constructio on services to the transsport, utilitie es and resou urces sectors across Ausstralia. Since esstablishmentt in 1987, Se eymour Whyyte has been n involved with w more thaan $5 billion n of complexx infrastructu ure and building projectts throughou ut Australia. Our success ss is testame ent to the colla aborative an nd flexible ap pproach we take toward ds our clients; together w with an unw wavering commitm ment to alwa ays deliverin ng on what w we promise.. Seymour Whyte em mploys more than 230 prrofessional staff, s and cu urrently holdds offices in Queenslland and Ne ew South Wa ales, with prrospective pllans for grow wth and geoographic exp pansion.
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