Tellings Golden Miller Group PLC
01 June 2005
Tellings Golden Miller Group plc ('Tellings Golden Miller' or the 'Company')
Proposed disposal of London Bus Division
The Board of Tellings Golden Miller announces that it has agreed, conditional
inter alia upon Shareholder approval at an extraordinary general meeting to be
convened for 9 am on Friday 17 June 2005, to dispose of its London Bus Division
to West Midlands Travel Limited ('WMT'), a subsidiary of National Express Group
PLC for an aggregate cash consideration of approximately £20.4 million, subject
Background to and reasons for the Disposal
At the time that the Company was admitted to AIM in August 2003, among the key
objectives of the Board was to grow and develop the Group's London bus operation
by tendering for additional routes that could be operated out of the Group's
existing depots, and to seek to acquire existing TfL operators in areas of
London where the Group did not operate in order to extend the Group's depot
network and provide a basis for tendering for further routes.
The Group has looked to acquire a number of smaller independent TfL operators
but has not concluded these deals either because of issues arising in the course
of due diligence or as a result of the Board's decision that it was not prepared
to pay above what it believed to be sensible acquisition prices.
A number of other factors have also adversely affected the London bus market
generally since the Company's flotation. Key among these has been rising London
employment costs which are having the effect of constraining gross margins.
Additionally, with the influx of larger operators into the London market, a
smaller operator such as Tellings Golden Miller is likely to find it
increasingly difficult to win new routes.
These factors led the Board to conclude that it should review whether the
Company could realise better returns for Shareholders by disposing of the London
Bus Division than it was likely to earn from continuing as a London bus
Taking into account the perceived risks and rewards, the Board concluded that
the offer to acquire the London Bus Division received from WMT provided an
attractive option for Shareholders.
The Board plans a period of reorganisation and consolidation of its residual
operations during the remainder of 2005. Following the Disposal, the Group's
strategy will be to increase our focus as a national operator, meeting the needs
of large and small clients. The Board sees significant opportunities for growth
in its regional coach and bus businesses in 2006 and beyond by acquiring
complementary businesses and extending existing contracts with its strong client
Terms of the Disposal
The Group's London Bus Division is operated through two wholly owned
subsidiaries, Tellings Golden Miller Buses and Tellings Golden Miller Middlesex.
Under the terms of the Disposal Agreement, the Company will sell the whole of
the issued share capital of Tellings Golden Miller Buses and Tellings Golden
Miller Middlesex to WMT for an aggregate cash consideration of approximately
£20.4 million, subject to adjustment. The Disposal includes the sale of the
Company's Surrey-based operation, based at Byfleet. The consideration is subject
to upward or downward adjustment on a pound-for-pound basis to the extent that
the net current assets/liabilities (subject to certain adjustments) of Tellings
Golden Miller Buses and Tellings Golden Miller Middlesex as at the date of
completion as determined by completion accounts are greater than or less than
In the financial year ended 31 December 2004, turnover of the London Bus
Division was £23.9 million, operating profit was £2.1 million and net assets
were £4.8 million. Based on these figures, the consideration for the Disposal,
assuming no adjustments are made, represents a multiple of 0.85 times turnover,
9.7 times operating profit and 4.2 times net assets.
The consideration of approximately £20.4 million represents a sum of
approximately 89 pence per Existing Share.
The Disposal is conditional upon Shareholders' approval at an extraordinary
general meeting of the Company's Shareholders to be convened for the purpose.
Transitional arrangements relating to the Disposal
The Disposal will involve the physical separation of the London Bus Division
from the Group's coach division at the Company's Twickenham and Hayes depots,
and will also require the Group to move its head office from its current site at
Fulwell to a new site, yet to be identified.
In order to effect this separation with a minimum disruption to both businesses,
a transitional services plan has been agreed detailing the transitional
arrangements that will be put in place.
Information on the remaining businesses
Following the Disposal, the remaining business of the Group will comprise:
• Tellings Golden Miller Coaches: operates 30 luxury coaches from its Twickenham
base for all types of coach hire throughout Great Britain and Europe;
• Tellings Golden Miller Crew Operation: operates at Heathrow Airport and
provides transport for aircrew from the airport to and from London and
surrounding areas for over 40 major airlines;
• National Express coach operation: Tellings Golden Miller Coaches Limited
operates as a subcontractor to National Express Group PLC from its depot at
• Burtons: a coach and bus operator based in East Anglia operating out of four
depots. Burtons operates as a subcontractor to National Express Group PLC and,
in addition, also undertakes coach and local bus work in East Anglia;
• Classic Coaches: a national coach and bus operator based in Newcastle.
Classic's main business is providing luxury coaches for educational tours to
Europe on behalf of major educational travel companies. Classic is also a
subcontractor to Nexus, with approximately 45 buses operating under contract;
• Linkline: a coach operator based in West London, primarily servicing the BBC
and Thames Valley University together with a major incoming Scandinavian tour
operator. Linkline also undertakes local private hire.
In the year to 31 December 2004, turnover from these operations totalled £14.5
million, operating profit was £1.3 million and net assets employed were £5.0
Use of proceeds of Disposal and special interim dividend
The majority of the cash proceeds arising from the Disposal will be paid to
Shareholders by way of a special interim dividend. The Board has today announced
a special interim dividend of 60 pence per Existing Share. The payment of the
special interim dividend will represent the payment by the Company to
Shareholders of an aggregate cash sum of approximately £14 million, assuming no
options are exercised by option-holders.
A timetable setting out the dates for entitlement to the special interim
dividend and the payment date will be announced as soon as practicable by the
The balance of the proceeds of Disposal will be retained by the Company and will
be used to repay bank indebtedness and provide additional working capital for
expansion of the Group's interests.
Current trading and prospects
Progress in 2005 has been satisfactory in both the Group's bus and coach
Later today, a circular setting out further details relating to the Disposal and
convening the extraordinary general meeting is being posted to Shareholders
together with the Annual Report and Accounts of the Company for the 12 months
ended 31 December 2004.
All defined terms used in this announcement carry the meanings attributed to
them in the circular to be sent to Shareholders later today.
There will be a presentation for analysts at 9:30am on Thursday 2 June at
College Hill Associates, 5th floor, 78 Cannon Street, London EC4. If you wish
to attend, please contact Emma Nunn at College Hill on 020 7457 2020 or respond
via e-mail to email@example.com.
Commenting on the Disposal, Stephen Telling, Chairman of Tellings Golden Miller
Group plc said: 'I am delighted to have secured an attractive price for the sale
of our London Bus Division and to be able to return a substantial cash sum to
our shareholders. Our remaining business offers good potential for growth and we
look forward to enhancing shareholder value in the coming years.'
Tellings Golden Miller Group plc Tel: 020 8755 7050
Stephen Telling (Chairman)
Robert Hodgetts (Finance Director)
College Hill Tel: 020 7457 2020
City Financial Associates Limited Tel: 020 7090 7800
Oriel Securities Limited Tel: 020 7710 7600
This information is provided by RNS
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