Acquisition of Shankland Cox Limited
11 February 2016
Aukett Swanke Group Plc ("ASG", "Company" or "Group")
Acquisition of Shankland Cox Limited ("SCL")
Aukett Swanke Group Plc ("ASG") the international group of architects and interior designers is pleased to announce that it has today acquired the entire share capital of Shankland Cox Limited ("SCL"), a well established firm of architects and engineers operating throughout the United Arab Emirates ("UAE") and incorporated in the United Kingdom.
The total consideration for SCL is a maximum of AED 16.0 million (approximately £3.0 million) and is being satisfied as to £1.13 million in cash on completion, the balance of approximately £1.87 million to be payable against the collection of SCL's debtors and work in progress following completion. The initial consideration will be funded by a term loan from the Group's bankers, with the Group expected to remain debt free (on a net basis) post transaction.
The vendor of SCL has agreed to remain with the company for at least two years post completion and will chair our enlarged Middle East operation.
SCL has a staff of 106 which, together with ASG's existing international network of subsidiaries, joint ventures, associates and licensees, creates an enlarged workforce of 146 in our Middle East operation and a total of 483 staff in the Group.
As we said when we acquired John R Harris & Partners ("JRHP") in June 2015, the Board has recognised for some time that ASG's operation in the Middle East, whilst maintaining a presence in the UAE, lacked the critical mass to successfully bid for some of the larger and more prestigious projects available. The JRHP acquisition immediately contributed to achieving that objective with a number of larger projects entering the final negotiation phase and subsequently being won. Whilst this has been a very positive result for the Group, the Directors believe that additional scale is required and that the depth of our skill base in the region could still be enhanced. The acquisition of SCL directly addresses these points and should further enable us to build up our local skill base through organised training and selective recruitment.
The impact of combining SCL with ASG's existing business is to create a more robust platform, and enhances our enlarged market position and offering in the Middle East as there is little client overlap between SCL and our existing operating entities in the region. The Acquisition will further provide the opportunity for some limited overhead cost savings as we integrate SCL into the Group.
SCL was established in the UK in 1962 and commenced operations in the UAE in 1986. During this period SCL has delivered many iconic projects, notably the Dubai Etisalat HQ Building at the Trade Centre and the Dubai Campus of the Sheikh Zayed University.
SCL offers a full design service including architecture, MEP engineering, structural engineering, interior design and landscape planning. This is aligned to the UAE market where turnkey solutions are preferred on larger scale projects. SCL's projects span the growth sectors of hotels and leisure, retail centres, educational centres and commercial buildings.
In the year to 31 March 2015 SCL made a pre-tax profit of £34,000 on revenues of £4.6 million and had net assets of £3.0 million as at that date, of which approximately £1.0 million was cash.
Commenting on the acquisition, Nicholas Thompson CEO said:
"With this acquisition we are taking a further step forward in implementing the development strategy which we have outlined in recent reports. We have been seeking to augment our Middle East offering for some time. The addition of SCL to our operation is therefore significant. It demonstrates our long term commitment to the region and creates an enterprise of 146 staff making us a major player in the UAE professional services market.
With this acquisition we can start to crystallise one of our main objectives of creating a more evenly sized balance between our geographical operations which in turn should provide stronger resilience to our business model as a whole.
Whilst we may add to our design based capabilities in the future, management focus is now on broadening our international reach and seeking a more diversified portfolio of associated revenue streams."
Enquiries:
Aukett Swanke Group Plc 020 7843 3000
Nicholas Thompson, Chief Executive Officer
Beverley Wright, Group Finance Director
finnCap Ltd (Nominated Adviser & Broker) 020 7220 0500
Corporate Finance, Julian Blunt, James Thompson
Corporate Broking, Alice Lane
Hermes Financial PR
Chris Steele 07979 604687
Trevor Philips 07889 153628
This information is provided by RNS
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