Transcript No Slide Title

Proposed Acquisition of Morrison
Greg Fitzgerald – Chief Executive
Frank Nelson – Finance Director
Andy Sturgess – Managing Director Construction Division
Ken Gillespie – Managing Director Construction Services (Morrison)
Proposed Acquisition of Morrison
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Proposed Acquisition of Morrison
Proposed Acquisition of Morrison
Acquisition Rationale
•
Excellent strategic fit
•
Morrison will complement existing construction operation
•
Operates in the same core markets with significant presence in
infrastructure
•
Services a different client base
•
Operates in different geographic regions
•
Considerable proportion of turnover from public and regulated
markets
•
Enlarged group will be able to compete for larger, higher margin
projects
Proposed Acquisition of Morrison
Proposed Acquisition of Morrison
Morrison Construction Services
• UK based construction business
• Focus on infrastructure projects, public and utilities sector
• Founded in 1948
• 1400 employees across 10 offices
• New Management
• Turnaround situation
Turnover £’m
EBIT £’m
• Year End March 04
344
(11.6)
• Year End March 05
336
1.3
• Change in business mix has beneficial impact on margins
Proposed Acquisition of Morrison
Proposed Acquisition of Morrison
Morrison PFI Business
• Long Established
• Based in Edinburgh
• Purchasing two Investments plus people
– DHE Portsmouth project
– Highland Schools project
• Good forward pipeline
Proposed Acquisition of Morrison
Proposed Acquisition of Morrison
Geographic Footprint
Offices
Swansea
Matlock
Runcorn
(ETM) Wakefield
Wales
(MBR) Tonbridge
Esher
Wakefield
London (Marlow)
Sutton Coldfield
Manchester
England
Dundee
Edinburgh
Grangemouth
Aberdeen
Business Stream
Inverness
Scotland
Building
Infrastructure
Water Frameworks
Divisional
Principal Offices
Subsidiary Offices
Proposed Acquisition of Morrison
Proposed Acquisition of Morrison
Summary of Transaction
•
In discussions for over 18 months
•
Detailed negotiations commenced December 05
•
Conditional agreement to acquire Morrison from Avon
•
Total consideration of £41.7m
– Construction £38.5m
– Investments £3.2m
•
Deferred payment of £6.6m
– Contract payments and Highland Schools
•
Valuation on debt free basis
•
No past pension fund liabilities
Proposed Acquisition of Morrison
Proposed Acquisition of Morrison
Financial Effects & Synergies
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Annual cost savings anticipated to be c. £2m per annum
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One off cost of delivering savings of £1.8m
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Restructuring of regional offices
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Improved supply chain management
•
Savings in combining business support functions
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Additional cross selling opportunities
•
Earnings enhancing in medium term
Proposed Acquisition of Morrison
Proposed Acquisition of Morrison
Integration Plan
•
Morrison will form part of Galliford Try’s enlarged construction
division
•
Ken Gillespie, MD of Morrison, will join Galliford Try Board
•
Construction division split into Building and Infrastructure
divisions
•
Andy Sturgess will run Building / Ken Gillespie will run
Infrastructure
•
Frank Nelson will run the enlarged Investments business
Proposed Acquisition of Morrison
Proposed Acquisition of Morrison
Financing
•
Placing and Open Offer to raise gross proceeds of £50m
•
£40m firm placing
•
£10m Open Offer fully to existing shareholders
•
Placing and open offer fully underwritten by KBC Peel Hunt
Proposed Acquisition of Morrison
Proposed Acquisition of Morrison
Use of Proceeds
•
Proceeds will be used to:
– Fund the cash consideration payable for the acquisition of
Morrison
– Provide additional equity funding to the Group following
acquisition of Chartdale
– Strengthened financial covenant for enlarged group
Proposed Acquisition of Morrison
Proposed Acquisition of Morrison
Summary
•
Excellent strategic fit
•
Enables Galliford Try to compete for larger, higher margin projects
•
Complements existing operation
•
Strengthens management team
•
Earnings enhancing in the medium term
•
Financed through Placing and Open Offer
Proposed Acquisition of Morrison
Proposed Acquisition of Morrison
Expected Timetable
•
End of institutional marketing, pricing and allocation
1 March
•
Announcement and dispatch/return of placing letters
2 March
•
Posting of open offer document/acquisition circular to shareholders
7 March
•
Close of open offer
28 March (11.00 am)
•
Placees notified of final allocation and announcement of open offer result
28 March (pm)
•
EGM and cash due from non-DVP payers
30 March
•
Admission, settlement of new shares, cash due from DVP payers
31 March
•
Certificates issued (where applicable)
7 April
* All dates subject to change
Proposed Acquisition of Morrison