9 Jul 2010 07:47
9th July 2010
Cyril Sweett Group plc ('Cyril Sweett' or the 'Group')
Acquisition of Widnell Limited ('Widnell')
Cyril Sweett, the international construction and property consultancy, is pleased to announce that the Group's wholly owned subsidiary, Cyril Sweett International (Holdings) Limited, has agreed to acquire the entire share capital of Widnell Limited, the third largest quantity surveying business in the Asia Pacific region. At current rates of exchange, the consideration comprises two elements, a maximum of £5.4m (HK$63.5m) in respect of the shares and a further sum in recompense for a proportion of net assets delivered at completion. The £5.4m (HK$63.5m) in respect of the shares is payable as to £3.1m (HK$36.225m) in cash and £2.3m (HK$27.725m) in shares with the initial consideration amounting to £3.2m (HK$37.5m).
The contract is subject to delivery of minimum Net Tangible Assets of HK$15m (£1.3m). There will be a net asset adjustment in respect of any net tangible assets delivered in excess of this amount. The Directors of the Group anticipate that the additional net assets delivered will be approximately £3m and this will be reimbursed in four instalments over a period of time. The first instalment will be reimbursed within 5 business days of the value of the Net Tangible Assets at completion having been determined.
Widnell's consolidated profit after tax was £1.4m (HK$16.6m) in the year to 28 February 2010 and £0.9m (HK$11.0m) in the year to 28 February 2009 on turnover of £9m (HK$106.4m) and £8m (HK$91.7m) respectively, meaning that the transaction, exclusive of the net assets adjustment, is being concluded at a multiple of less than 4 times relevant historical profits.
Widnell is based in Hong Kong and has subsidiaries in the People's Republic of China in Shanghai, Beijing, Wuhan, Shenzen, Guangzhou, Chengdu and Chongqing and also in Macau. It employs nearly 400 people providing a wide range of consultancy services to both private and public sector clients for building developments, civil and infrastructure projects, interior fit-outs and maintenance work. Its services include cost planning, quantity surveying, contract and project administration and management, project financial services, due diligence and dispute resolution. The acquisition follows the Strategic Alliance formed with Widnell in March 2010, which led to the creation of the Widnell Sweett joint venture in Hong Kong.
The consideration in respect of the shares is in three tranches. The initial consideration is payable on completion and equates to 60% of the Widnell group's taxed profits for the year ended 28 February 2010, capped at HK$10m, multiplied by 6.25. This will be satisfied as to 55% in cash and 45% in shares in Cyril Sweett Group plc.
The second and third tranches are payable on the first and second anniversaries of completion respectively and each equates to 20% of the Widnell group's taxed profits for the years ending 31 March 2011 and 2012, again subject to a cap of HK$10m, adjusted in respect of a proposed change of accounting reference date, multiplied by 6.5. These tranches will be satisfied as to 60% in cash and 40% in shares in Cyril Sweett Group plc, subject to Cyril Sweett's option to disburse these tranches in cash should its share price at the payment date be less than 50 pence per share.
Taxed profits for each relevant year for purposes of calculating consideration are subject to a floor of HK$2.5m and the vendors retain entitlement to 40% of the adjusted taxed profits from completion to 31 March 2011 and 20% for the year ending 31 March 2012.
Dean Webster, Cyril Sweett Chief Executive Officer, commented:
"China provides a key growth opportunity for the Group and Widnell Sweett provides the Group with the means to unlock that market. The Group's strategy is to diversify the business across territories and sectors that are forecast to grow, whilst consolidating our presence where the business has a market-leading position. We are delighted that this deal fits squarely in line with our strategy".
Kim Berry, Managing Director of Widnell Sweett, commented:
"The combination of Widnell Sweett's geographical coverage in Asia and Cyril Sweett's expertise means the Group is now very well placed to provide services to the industry across the region's expanding markets. We look forward to being in an even stronger position to take full advantage of these exciting opportunities".
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For further information call:
Cyril Sweett Group plc 020 7061 9000
Dean Webster, Chief Executive Officer
Chris Goscomb, Chief Financial Officer
Brewin Dolphin 0113 245 9341
Andrew Kitchingman
Sean Wyndham-Quin
Financial Dynamics 020 7831 3113
Jonathon Brill
Billy Clegg
Georgina Bonham
Notes to Editors
About Cyril Sweett:
Cyril Sweett is a leading international construction and property consultancy offering expertise in cost consultancy, project management, building surveying and a comprehensive range of specialist consulting services.
Cyril Sweett floated on the AIM market of the LSE in October 2007.
Founded in 1928, the Group has 35 offices throughout the United Kingdom and in Australia, France, India, Ireland, Singapore, Spain, Saudi Arabia and the United Arab Emirates.
About Widnell:
Widnell is a private company, registered and headquartered in Hong Kong. Established in 1977, it has operated on Macau-based projects since 1993 and opened its first office in the People's Republic of China in 1995.