21 February 2024
Dewhurst Group
plc
("Dewhurst", the "Group" or the "Company")
Acquisition of minority
interest in P&R Liftcars Pty Ltd
1.00 AUD : 0.51
GBP
Dewhurst Group plc (AIM: DWHT), the
global manufacturer and supplier of quality components to the lift,
transport and keypad industries, announces that it will acquire the
remaining shares of P&R Liftcars Pty Ltd ("P&R Liftcars") that are not already
owned by the Company (representing a 25 per cent. stake in P&R
Liftcars). P&R Liftcars, based in Australia, is a lift car
interior manufacturer whose core business is the design,
manufacture and installation of new interior lift finishes and
full-depth door frame cladding.
Background
On 1 February 2017, Dewhurst
announced that it had signed an agreement to acquire 75 per cent.
of the business and assets of P&R Liftcars from Roy Peat and
Peter Hosey for a cash consideration of A$1.54 million plus a cash
adjustment on completion for 75% of the inventory less employee
liabilities of c. A$190k (the "Initial Acquisition"). Roy Peat (the
"Seller") retained a 25 per
cent. shareholding in P&R Liftcars and remained a statutory
director of the legal entity.
From the date of the Initial
Acquisition to the year ended 30 September 2023, P&R Liftcars
has delivered value to Dewhurst shareholders with an initial
payback period of 3.5 years and IRR of 41 per cent.
For the year ended 30 September
2023, P&R Liftcars reported profit after tax of A$163k (£84k)
as well as net assets of A$5.7 million (£3.0 million), a figure
materially lower than in recent years. This is due to fewer capital
projects being released during the pandemic which impacted P&R
in its 2023 financial year. As at 31 January 2024, P&R
Liftcars' contracted and forward orders comprised A$4.0
million.
Put Option
A clause within the original
shareholders' deed between Dewhurst, P&R Liftcars and the
Seller, signed on 1 February 2017, granted the Seller a put option
which, when exercised, would cause Dewhurst to acquire his
remaining interest in P&R Liftcars ("Put Option") at a pre-determined
multiple[1] of P&R Liftcars'
EBIT.
On 6 March 2020, the Company agreed
to amend the terms of the Put Option in the Seller's favour, such
that the Put Option was to be based on 2.5x the average of P&R
Liftcars' best three financial years EBIT, following the Initial
Acquisition ("Amended Put
Option"). The Put Option was amended to provide for
the retention of the the Seller in a managerial role within the
P&R Liftcars business and further to motivate him to
deliver performance in the years ahead. Dewhurst deemed the Amended
Put Option to be in the interest of Dewhurst shareholders as it
kept a vital staff member running a subsidiary during a time of
immense disruption caused by Covid.
6
March 2020 Related Party Transaction
As the Seller was a director of
P&R Liftcars on 6 March 2020 (which itself was a subsidiary of
the Dewhurst), he was a related party of the Company (by definition
of the AIM Rules for Companies ("AIM Rules")). The Amended Put Option
therefore constituted a Related Party Transaction under AIM Rule
13, as the revised consideration due to the Seller upon the
eventual exercise of the Put Option could have exceeded the
relevant thresholds in the AIM Rules class tests.
Singer Capital Markets was appointed
as the Company's Nominated Adviser on 30 July 2020 and is therefore
unable to retrospectively consult with the directors of Dewhurst in
forming the statement that was required at the time under the AIM
Rules that the terms of the transaction were fair and reasonable
insofar as Dewhurst's shareholders are concerned.
Related Party Transaction
The Seller has now provided written
notice to Dewhurst exercising the Put Option. Dewhurst will
therefore acquire the remaining 25 per cent. of P&R Liftcars
from the Seller for consideration of A$2.9 million (£1.5 million)
(the "Transaction"),
payable in cash. The Seller will remain with the business in a full
time capacity until at least September 2024 to enable an orderly
handover. The Transaction will be immediately earnings enhancing to
shareholders of Dewhurst.
As the Seller is a director of
P&R Liftcars (which remains a subsidiary of Dewhurst) and the
Amended Put Option was not assessed under AIM Rule 13 at the time,
the Transaction is classified as a related party transaction under
the AIM Rules. The directors of Dewhurst consider, having consulted
with Singer Capital Markets its Nominated Adviser, that the terms
of the Transaction are fair and reasonable insofar as its
shareholders are concerned.
Contacts:
Dewhurst Group Plc
|
Tel: +44 (0)208 744 8200
|
Richard Dewhurst,
Chairman
Jared Sinclair, Chief Financial
Officer
www.dewhurst-group.com
|
|
Singer Capital Markets (Nominated Adviser and Sole Broker)
|
Tel: +44 (0)207 496 3000
|
Rick Thompson / Alex Bond
|
|