Ricardo PLC Rail Acquisition (7373Y)
May 13 2019 - 1:00AM
UK Regulatory
TIDMRCDO
RNS Number : 7373Y
Ricardo PLC
13 May 2019
13 May 2019
Ricardo plc
("Ricardo" or the "Group")
RICARDO EXPANDS RAIL PRESENCE IN AUSTRALIA
WITH ACQUISITION OF TRANSPORT ENGINEERING PTY LTD
-- Transport Engineering is a leading railway technical adviser
and consultancy, highly regarded by key Government bodies and
private clients in Australia
-- The acquisition will provide Ricardo with a strong foothold
in the rapidly growing Australian rail market together with a
footprint for other Ricardo businesses.
-- The acquisition will immediately enhance underlying earnings
and will be funded from the Group's existing bank facilities
Ricardo plc ("Ricardo"), a global engineering, technical,
strategic and environmental consultancy business, today announces
that it has signed a share purchase agreement, with Stephen and
Alia Boyd, to acquire the entire share capital of Transport
Engineering Pty Ltd ("Transport Engineering" or the "Company"), one
of Australia's largest rail systems technical engineering firms,
for a total maximum cash consideration of AUD$53.6 million (GBP28.9
million), subject to any adjustments for cash and normalised net
working capital and certain financial performance targets (the
"Acquisition").
This Acquisition provides an active presence for Ricardo in
Australia, a strategically important, sizeable and growing market.
Transport Engineering will be renamed Ricardo Rail Australia and
will form a core part of the Group's Rail segment adding breadth
and depth to Ricardo's existing strong rail capabilities.
Transport Engineering is a privately-owned Company and Director
Stephen Boyd will remain and continue to lead the business together
with the Company's employees.
Dave Shemmans, Chief Executive Officer of Ricardo plc
commented:
"I am delighted to be able to announce the signing of the share
purchase agreement with Transport Engineering and look forward to
welcoming Stephen Boyd and his team into the global Ricardo family.
I am excited about the breadth and depth of experience that
Transport Engineering will bring to Ricardo and the opportunities
that this will bring for Ricardo in Australia. Transport
Engineering has an excellent market reputation, strong customer
relationships and a very similar culture of quality and excellence
in engineering to that of Ricardo."
"This acquisition is in line with our strategy of
diversification both geographically and market sector, further
increasing the proportion of our business in the Rail sector. In
light of the well documented current challenges in the Automotive
market where we have seen supressed performance this year, our
strategy and market diverse portfolio of businesses is particularly
relevant."
Information on the Acquisition terms
Ricardo will acquire the whole of the issued share capital of
Transport Engineering Pty Ltd and its 45% subsidiary Wamarragu
Transport Services Pty Ltd.
The maximum consideration is AUD$53.6 million (GBP28.9 million),
all payable in cash, subject to adjustment to reflect normalised
levels of working capital at the date of completion. At completion,
the vendors will receive AUD$38.6 million (GBP20.9 million), with
AUD$7.8 million (GBP4.2 million) and AUD$7.2 million (GBP3.8
million) on the back of the Company's 2020 and 2021 30 June year
end audited financial statements, subject to the financial
performance in the respective periods.
In the year ended 30 June 2018, the Company recorded revenues of
AUD$21.5 million (GBP11.6 million) and adjusted standalone profit
before tax of AUD$4.7m (GBP2.5 million) and gross assets of AUD$7.1
million (GBP3.8 million).
The consideration will be funded from the Group's existing
GBP150m Committed Revolving Credit Facility. It is expected that
the Acquisition will be immediately enhancing to underlying
earnings. Ricardo's ownership of the business is expected to be
effective on or before the 30(th) June 2019.
Information on Transport Engineering and rationale for the
transaction
Transport Engineering is a highly regarded Australian rail
systems engineering technical adviser. Since it started trading,
the Company has delivered an impressive track record of growth. It
offers advisory, design and delivery services on projects in both
the public and private sector and employs a staff of c.100
engineers and specialists, in locations across Australia and
Asia.
Transport Engineering has a strong technical advisory capability
in the full life cycle management of rolling stock and maintenance
procurement programs on behalf of its clients, as well as the
provision of on-site inspectors and auditors in suppliers'
premises, safety engineering, RAM / maintenance engineering,
project management, human factors, testing and commissioning and
systems integration.
Ricardo growth strategy in rail is underpinned by global
challenges related to urbanisation, the increasing global interest
in urban and high-speed networks, and the integration of critical
and complex rail technologies as government respond to accelerating
levels of urbanisation. This Acquisition is central to the delivery
of growth in transportation, one of the Group's strategic pillars
alongside Energy and Scarce Resources and Waste.
Note: An exchange rate of GBP1.00:AUD$1.85 has been used
throughout this announcement.
Further enquiries
Ricardo plc Tel: 01273 455611
Dave Shemmans, Chief Executive Officer Website: www.ricardo.com
Ian Gibson, Chief Financial Officer
Newgate Communications Tel: 020 7680 6550
Adam Lloyd / Ian Silvera ricardo@newgatecomms.com
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END
ACQDMGMKVGDGLZM
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