Molins PLC
28 November 2006
28 NOVEMBER 2006
FOR IMMEDIATE RELEASE
MOLINS PLC
SALE OF SANDIACRE ROSE FORGROVE
The Board of Molins PLC, the international specialist engineering group,
together with its wholly owned subsidiary Molins Richmond Inc., has today
entered into a contract to sell its Sandiacre Rose Forgrove packaging machinery
business ('SRF') based in Nottingham, UK and Pennsylvania, USA. The sale of SRF
is conditional on the completion of information exchange and consultation with
the UK based employees of SRF, in accordance with legislation. It is expected
that the sale will be completed before the end of the year. The freehold
property from which SRF operates will be retained and leased to the purchaser.
The UK part of SRF is being acquired by Hayssen Europe Limited and the US part
by Hayssen Inc. (collectively 'Hayssen'), both being subsidiaries of
Barry-Wehmiller Companies Inc., based in St Louis, Missouri, USA, for a cash
consideration of £3m payable on completion. A subsequent adjusting payment will
be made or received, to reflect the movement in the value of the working capital
between 30 September 2006 and completion. The cash proceeds will be used to
reduce the Group's external debt. At 30 September 2006, the book value of the
gross assets of SRF was £7.0m and, after deduction of liabilities to be
transferred, the book value of the net assets was £4.8m. The transaction will
result in a book loss of approximately £2.0m before taxation and after expenses
of £0.2m. Operating losses at SRF were £1.0m in 2005 on sales of £14m and £1.2m
in the nine month period to 30 September 2006 on a reduced level of sales.
As a separate transaction Molins intends to market and sell the property which
is held in the books at £1.8m. The property has an estimated market value in
excess of £4m.
Background on Sandiacre Rose Forgrove
SRF, which employs 130 people, comprises the businesses of Sandiacre Packaging
Machinery, acquired by Molins in 1994 and Rose Forgrove, acquired from
receivership in 2001. SRF is a manufacturer of vertical and horizontal form
fill and seal bagging and wrapping machines and sells principally into the food
and other fast moving consumer goods industries.
Reasons for the Sale
SRF operates in a very competitive segment of the packaging machinery market and
the majority of its products are sold to customers who are themselves facing
considerable competitive pressures, particularly in the food industry in the UK
and Europe. Despite some operational improvements, current margins at SRF are
not adequate to support its future development.
Barry-Wehmiller is a major supplier of packaging machinery and Hayssen is one of
the world's largest suppliers of vertical form fill and seal bagging machines.
It already has a sales and service operation in the UK. The merged business
will be better able to exploit economies of scale.
Molins Packaging Machinery division
Following the sale of SRF the division will comprise ITCM, Langen, Langenpac and
Cerulean Packing. Together these businesses had sales in 2005 of £30m and
generated operating profits of £2.3m.
Unlike SRF, the focus of these businesses is on high value-added engineering
solutions, building on their skills and capability in delivering complex
projects, supported by a range of core products in which the Group continues to
invest. There is greater potential for growth in these areas as customers
continue to out-source their engineering requirements and the scope for
differentiation in these market areas is also greater.
Within these businesses order intake in the first ten months of 2006 has been
70% higher than in the same period last year, with the benefit of some large
integration projects. The division has a strong order book for delivery in
2007.
MPM continues to invest in people, products and infrastructure to accommodate
the growth in the businesses. In 2007 Langenpac will move into leased premises
that will be built to its specification, giving it 50% more space, and ITCM will
extend its premises by increasing the size of its workshop by 50%.
Enquiries: Molins PLC Tel: 01908 219000
Peter Byrom, Chairman
David Cowen, Group Finance Director
Issued by: Citigate Dewe Rogerson Tel: 020 7638 9571
Margaret George
This information is provided by RNS
The company news service from the London Stock Exchange