22 December 2004
FOR IMMEDIATE RELEASE
22 December 2004
Proposed disposal of European Roads Businesses
• Jarvis has entered into a conditional agreement to sell European Roads
businesses to Somaro for €35.3m (£24.5m);
• Somaro will assume net indebtedness in European Roads businesses at
completion, which currently amounts to approximately €7.1m (£4.9m);
• In November 2004 the European Roads businesses paid a dividend to Jarvis
of €10.5m (£7.3m);
• Transaction is conditional upon appropriate French competition clearance
and Jarvis shareholder approval - completion expected on or after 1 April
• Proceeds are anticipated to be used, in part, to reduce group
indebtedness with the balance available for working capital purposes.
Alan Lovell, Chief Executive commented:-
"This disposal and the funds generated by it represent further significant
progress regarding the implementation of the strategy to reduce debt and focus
on three core business areas in future, being the UK rail, road and plant hire
activities. Two of the key disposals the Group needed to make have now been
achieved with negotiations about the remaining realisation, the sale of the Tube
Lines interest, now at an advanced stage. Refinancing discussions with the
Group's lenders are progressing constructively and, whilst a great deal remains
to be achieved, I am confident that our objectives will be met."
Jonathan Haslam Tel: 020 7017 8147
Paul Downes/ Bridget Fury/ Lachlan Johnston Tel: 020 7653 6620
Dresdner Kleinwort Wasserstein
Chris Treneman/ Simon Gregory Tel: 020 7623 8000
Proposed disposal of European Roads Businesses
Jarvis plc ("Jarvis") is pleased to announce that it has today signed a
conditional agreement with Somaro S.A. ("Somaro"), a subsidiary of Bouygues
S.A., to sell its European Roads businesses (which comprises Prosign S.A. and
its subsidiaries ("Prosign") and Veluvine B.V. and its subsidiary ("Veluvine"))
for a cash consideration is €35.3 million (£24.5 million). In addition, Somaro
will assume the net indebtedness of the European Roads businesses on completion,
which currently amounts to approximately €7.1 million (£4.9 million). In
November 2004, Veluvine declared and paid a €10.5 million (£7.3 million)
dividend to the Jarvis group.
The agreement is conditional, inter alia, on Jarvis shareholder approval and
French regulatory approval.
Background to and reasons for the disposal
As outlined in Jarvis's 2004 Annual Report, the Directors are implementing a
business plan that is designed to develop a simpler, leaner and more cash
generative group that is sustainable in the long term.
The strategy underlying the business plan is for the Jarvis group to focus
primarily on UK rail, road and plant hire activities. The Directors believe this
will enable Jarvis to maintain a competitive advantage and grow its market share
by capitalising on its investment in technology, new products and equipment.
As part of its restructuring initiatives, the European Roads businesses were
identified as non-core and, in conjunction with Dresdner Kleinwort Wasserstein,
a process was initiated to implement the sale. After extensive discussions and
careful consideration of the proposals received, the Board has decided to sell
the European Roads businesses to Somaro.
Information on Prosign and Veluvine
The European Roads businesses are active in the manufacture of road marking
products, the contract application and sales of those products in the road
safety industry in France and the road marking industry in The Netherlands.
Prosign commenced business in 1952. The head office is in La Garenne-Colombes,
near Paris, and it currently employs approximately 435 people across France.
Prosign offers a comprehensive range of integrated products and contracting
services in the road marking, safety products and equipment, road signs, and
road/bridge repair markets in France. Prosign focuses on developing and offering
high quality, added value products and services for the markets in which it
operates, with particular emphasis on seeking environmentally friendly
solutions. It manufactures its road marking products and equipment from two
manufacturing plants in the Paris region at Noyon and at Bretigny-sur-Orge.
Prosign's revenues are primarily derived from its road marking activities. It is
one of the leaders in both road markings manufacturing and contracting in
France. Prosign's customers are primarily from the public sector, including
municipalities, regional councils and Direct Labour Organisations. Approximately
7 per cent. of its turnover is generated outside France.
Veluvine commenced business in 1895. The headquarters and manufacturing
facilities are in Breda, The Netherlands, employing approximately 20 full time
Veluvine is a market leader in road markings in the Netherlands. It focuses on
the manufacture of paint and related products such as thermoplastics and
two-components the majority of which are sold to private contractors.
The Veluvine Group is geographically well diversified with exports accounting
for approximately 60 per cent. of its revenues. Key markets include France,
Germany and Belgium as well as Eastern Europe. Veluvine offers an
environmentally friendly product range that is tailored specifically to meet the
various certification requirements of its countries of export.
Financial information on Prosign and Veluvine
The following financial information has been extracted without material
adjustment from the consolidation returns used for producing the audited
financial statements of Jarvis. For the year ended 31 March 2004, Prosign and
Veluvine had turnover of £45.3 million (2003: £41.8 million) and £11.4 million
(2003: £8.4 million) respectively, an operating profit of £1.7 million (2003:
£1.6 million) and £2.2 million (2003: £1.4 million) respectively, and profit
before tax of £1.5 million (2003: £1.5 million) and £2.4 million (2003: £1.6
Somaro will assume the net indebtedness of the European Roads businesses on
Completion, which currently amounts to approximately €7.1 million (£4.9
As at 31 March 2004, Prosign and Veluvine had net assets of £8.8 million and
£9.4 million respectively. In November 2004, Veluvine paid a dividend of €10.5
million (£7.3 million) to the Jarvis group.
Principal terms and conditions of the disposal
This disposal is to be effected through the inter-conditional sale by Streamline
International Limited ("Streamline") (a wholly owned subsidiary of Jarvis) to
Somaro of the entire issued share capital of Veluvine and 99.999 per cent. of
the issued share capital of Prosign (the minority shareholding will remain owned
by certain minority shareholders). The consideration payable for the European
Roads businesses is €35.3 million (£24.5 million). 90 per cent. of the
consideration will be satisfied in cash on completion and the remaining 10 per
cent. will be held in an escrow account or used to support the provision of a
standby letter of credit to Somaro. The escrow account would be used to pay for,
or the standby letter of credit would support, any warranty or indemnity claims
made by Somaro. Either arrangement would terminate by 31 December 2006 except to
the extent of the amount of any unsettled warranty claims. Somaro will assume
the net indebtedness of the European Roads businesses on completion. The
consideration will be subject to an adjustment, after completion, to the extent
combined Prosign and Veluvine shareholders' funds at 31 March 2005 are lower
than approximately €20.5 million.
Completion of the disposal of the European Roads businesses is conditional,
inter alia, upon approval by Jarvis shareholders and the to receipt of
appropriate French competition clearance, which is not expected to be
forthcoming before the end of February 2005. Completion is also subject to there
being no material adverse change to the combined Prosign and Veluvine
shareholders' funds having occurred since signing. If Jarvis shareholder
approval is obtained and all other conditions are met, completion will take
place on or after 1 April 2005.
Financial effects of the disposal and application of disposal proceeds
After taking account of the goodwill relating to Prosign and Veluvine, the
disposal of the European Roads businesses will give rise to a loss on disposal
of approximately £3.0 million (after costs).
It is intended that a proportion of the net cash proceeds will be used for the
repayment of Jarvis Group indebtedness with the balance available for working
Extraordinary General Meeting
A circular containing a notice of Extraordinary General Meeting will be
despatched to shareholders in due course.
This information is provided by RNS
The company news service from the London Stock Exchange