RNS Number : 6389K
Metic Group plc
23 December 2008
23 December 2008
Metic Group plc
("Metic" or "the Company" or "the Group")
Admission to AIM
Metic Group plc, the holding company of a group of companies which design, engineer and construct architectural glass, today announces
the introduction of its Ordinary Shares to AIM and commencement of dealing.
* Metic specialises in the design, engineering and construction of
architectural glass within the architectural roof glazing and glass fa?e
industries.
* Arbuthnot Securities Limited is acting as the Group's Nominated Adviser
and Broker.
* At the Admission Price, Metic's market capitalisation will be
approximately �15.7 million.
* The Group is involved in projects in both the public sector (hospitals,
universities, colleges and schools) and the private sector (offices,
shopping centres and arenas).
* Customers in the private sector include Hammerson, Land securities and
British Land.
* The Group has contracted projects due for delivery over the next 18
months of �40 million.
* A growing proportion of the Group's revenues are derived from overseas,
particularly from petro economies such as the Middle East and Trinidad.
* The information required by AIM Rule 26 is available on the Company's
website at www.meticgroupplc.com
ADMISSION STATISTICS
Number of Ordinary Shares in issue on Admission 55,378,284
Admission Price 28.5p
Market capitalisation of the Company at the Admission Price on �15.7 million
Admission
AIM symbol METC.L
ISIN code IE00B3CGTD23
Stephen Field, Chief Executive of Metic, commented,
"We are delighted to announce our public market listing on AIM today. Metic Group has a strong business model and is well funded. Our
objective, in listing, is to raise our visibility and awareness of the business we have built and our position as a leading building systems
and product group in the UK."
Non-executive Chairman, Philip Marley, added.
"In a short time, we have built a leading buildings systems business in the UK. We are now focused on accelerating growth
internationally. Our AIM listing provides us with greater access to international capital which will provide additional support as we
increase the scale and scope of our business."
Enquiries:
Metic Group plc Stephen Field, Chief Executive T: 07966 492 478
William Booth, Finance Director
Arbuthnot Securities John Prior/Alasdair Younie T: 020 7012 2000
Buchanan Communications Charles Ryland/Jeremy Garcia T: 020 7466 5000
K Capital Source Jonathan Neilan/Harriet Mansergh T: +353 1 631 5500
Introduction
The Company has been incorporated with the aim of becoming the holding company of a group of companies which design, engineer and
construct architectural glass. Its products fall into the broad categories of fa?es, roof systems, internal glazing and specialist
structures, with fa?es and roof systems accounting for the majority of revenue for the year ended 31 December 2007. The production or
processing of glass is not carried out by the Group.
A Palmer Market Research report published in March 2008, estimated that the UK Aluminium Commercial Glazing Market was worth
approximately �2.7 billion in 2007, of which approximately 25 per cent. related to roof glazing and curtain walls, the product areas of most
relevance to the Group.
The Group is involved in projects in both the public sector (hospitals, universities, colleges and schools) and the private sector
(offices, shopping centres and arenas). Customers in the private sector include Hammerson, Land Securities and British Land. It is the
directors' view that the Group has little or no dependency on the residential sector. A growing proportion of the Group's revenues are
derived from overseas, particularly from petro economies such as the Middle East and Trinidad.
The Directors believe that the Group is well positioned to take advantage of the opportunities in this sector and to grow both
organically and by acquisition.
History and Background
Historically, as independent firms, the businesses that now make up the Group experienced difficulties in winning large contracts due to
their size relative to larger European competitors, and were therefore forced to work together in relation to specific projects or risk
losing contracts to such European competitors. Following encouragement from UK customers, Stephen Field, together with Philip Marley and
Laurence Davis considered the possibility of consolidating the industry in the UK in order to enable the Group to compete effectively for
larger contracts.
The consolidation process began in 2007 when Metic Solutions became aware that Space Decks, a specialist in the design and installation
of sophisticated steel and glass skylights and fa?es, was experiencing financial difficulties and that the existing management were
retiring. In August 2007, Artguide Limited, a newly incorporated company owned by Laurence Davis acquired the business of Space Decks out of
administration for a cash consideration of �225,000, with �200,000 payable on completion of the acquisition and the balance of which was
paid on 5 November 2008. The share capital of Artguide Limited was immediately acquired by Melaway, its name was changed to Space Decks
Systems Limited ("SDSL") and a number of the existing Space Decks contracts were novated to SDSL which then commenced trading.
In September 2007, Metic Solutions entered into call options with the shareholders of Melayway, a company in which Stephen Field was a
director, pursuant to which it was granted the right to acquire its entire issued share capital. In February 2008, Metic Solutions exercised
the option and Melayway was acquired for approximately �3.3 million in cash paid to the shareholders of Melayway and the issue of 8.0 per
cent. of the issued share capital of Metic Solutions to Stephen Field.
In March 2008, Portal, SDSL's major competitor, went into administration and Melayway acquired from the administrators for �850,000, the
right to acquire its goodwill and intellectual property rights and also the right to approach the third parties of contracts entered into by
Portal to seek their novation of such contracts to Melayway. The consideration was payable as �200,000 on completion, �400,000 payable in
September 2008 and �250,000 in March 2009. Portal, founded in 1953, specialised in bespoke glass roofs and planar glass fa?es and its
business is now continued by Melayway through the newly formed "Portal Glass Solutions" division.
The Group's headquarters are in Chard, Somerset with offices in Fleet, Hampshire and Stourbridge, West Midlands.
The Group's completed projects include installations at the Merrill Lynch building in the City of London, the O2 Arena, the British
Airways plc headquarters, York Racecourse, The Trafford Centre in Manchester, the Baltic Mills in Newcastle-upon-Tyne, Victoria Square in
Belfast and West Mall in Trinidad.
The Group has been funded since inception through a combination of private investment, term loans from the Bank of Ireland and an
overdraft facility from HSBC Bank. In October 2007, private funding of �1 million was invested in Metic Solutions to facilitate its
consolidation strategy. More recently, in addition to smaller amounts of private investment received from Group employees and shareholders
of Metic Solutions, the Group has also arranged a bonding facility and letters of credit totaling �6.5 million, enabling the Group to
finance larger projects requiring more extensive working capital commitments. As at 30 November 2008, the Group employed 103 people.
Business Operations
The Group specialises in the design, engineering and construction of architectural glass within the architectural roof glazing and glass
fa?e industries. It does not produce glass, nor is it involved in glass processing (such as toughening, laminating etc). The Group's product
areas fall broadly into the following four categories:
* Glass Fa?es (walls) - a glass external cladding of a building, serving as
both an aesthetic and structural function;
* Glazed Roof Systems (atria) - suspended glazing, walk on glass and similar
designs;
* Interior Glazing - similar to the fa?e segment, but there is no need for
the structure to be weather proof and cleaning / maintenance requirements
are less, meaning more complex features can be used; and
* Specialist Structures - special projects that do not sit naturally in the
other operating segments. These projects tend to involve using a range of
technologies and components used in other areas of the clients' business,
for example, the "play zone" in the Millennium Dome and the "Space Ship"
in Brunei.
Melayway was founded in 1993 and specialises in the design and construction of specialist glass fa?es on different types of buildings,
mainly in vertical walls. Melayway's particular focus is on aluminium and timber support engineering and the development of free-span
vertical glazing. This product is most regularly used in curtain walling support structures for continuous glass-fronted buildings. The
curtain wall method of glazing allows glass to be used in large uninterrupted areas resulting in continuous, contemporary style fa?es.
Melayway undertakes projects in a variety of industry sectors for a wide range of clients in the UK and overseas. Current projects range in
size of revenue generation from approximately �100,000 to �7 million.
The Directors believe that the foundations of Melayway's success rest on a combination of its commitment to quality, the ability to add
value to standard solutions and be price competitive, whilst being able to keep internal costs under control. Melayway has more recently
developed, and continues to develop, the ability to incorporate new industry standards and regulations pertaining to energy conservation.
SDSL and the Portal Glass Solutions division of Melaway both specialise in the design, engineering and construction of high profile and
design-led free-span glass roofs and walls. By retaining a number of key former employees of Space Decks and Portal, the Directors believe
that the Group has maintained the extensive expertise developed over decades in this specialised sector, both in the UK and overseas by
Space Decks and Portal. In the view of the Directors the individual skills of the employees of each of SDSL and the business of Portal Glass
Solutions complement each other with the expertise of SDSL being in the provision of steelwork and glass solutions, whereas the business of
Portal Glass Solutions concentrates on large free-span glass using both glass and steelwork as a structural support.
As a result of the consolidation process, the Group has assembled a highly skilled and qualified management team with extensive industry
experience in a number of regions including the UK, Europe, the Middle East, the US and the Caribbean. The Directors believe based on
research conducted by the Group that the Group is now one of the largest UK based operators in the structural glazing industry and the UK's
largest specialist glass roof firm.
The Group has centralised the project management, technical, contracts and operations, support administration, health and safety and
commercial departments of the three original businesses. The sales team is also centralised, enabling the Group to sell the three varying
services, under their original trade names, to its widened, existing and prospective customer base.
An overview of the responsibilities of the five main disciplines is as follows:
I. Sales Team - develops and maintains relationships with clients and intermediaries and is
responsible for estimating and negotiating contract value at the initiation stage.
II. Technical Department - designs and engineers the fa?e or roof. The technical department provides the design to realise the concept
of the developer's architect, in as economical a manner as possible. Design work is undertaken primarily in-house with third party design
consultants engaged to satisfy peaks in demand. The steelwork, aluminium, processed glass and other components are procured from a number of
industry-recognised suppliers in the UK and throughout Europe.
III. Project Management (including construction management) - is a key competence of the business and is carried out by highly skilled
staff. Project management entails control of the design process, subcontracting of glass and metalwork supply, and on-site management of the
installation process. Project management is divided into the contracts team, whose primary responsibility is the day to day supervision of
on-site projects and sub-contractors, and the operations team, who buy in materials, plan projects and compile operating manuals.
IV. Commercial Department - negotiates and prices the applications for payments raised to clients as work is completed.
V. Finance and Administration - includes the accounting function and manages human resources and other administrative work.
Following consolidation, the Group has been able to extend its product range to include advanced roof and fa?e systems, environmentally
improved products, such as photo-voltaic, geothermal conduit in framing and automatic smoke and natural ventilation and solar shading. The
Group aims to take advantage of synergies created by the complementary products and services it can now offer to customers and the cost
advantages of integration, through inter alia, increased purchasing power. The Directors believe that consolidation has improved the
competitive position of the Group, enhanced its ability to negotiate larger scale projects with potential customers and improved its
bargaining power with suppliers.
The Market
The installed value of the UK aluminium commercial glazing market in 2007 was approximately �2.7 billion, a record high level, and 45
per cent. higher than in 2004. Glass is playing an increasingly important role in property construction, for reasons of aesthetics, cleaning
efficiency and building 10 energy performance. Buildings are responsible for approximately 50 per cent. of the UK's energy consumption and
carbon emissions. As at October 2008, all commercial buildings in the European Union were required to have an Energy Performance Certificate
as part of the Energy Performance of Buildings Directive, European legislation that must be adopted by all Member States of the European
Union.
Fa?es
One of the Group's principal product areas is curtain walling, the UK market for which had a value of �529 million in 2007. A survey by
Palmer Market Research estimated that the installed value of the aluminium curtain walling market in the UK will grow by 5 per cent. in 2008
before declining in 2009 and 2010, before the effects of inflation.Within the curtain walling sub-sector, public sector installation
contracts are forecast to grow by 31 per cent. between 2007 and 2012, primarily due to contracts arising from the preparations for the 2012
Olympics Games in London. Installation contracts for curtain walling in the education sector are forecast to grow by 30 per cent. between
2007 and 2012.
Roof Systems
Another of the Group's main product areas is roof glazing, the UK market for which had a total value of �161 million in 2007. The UK
roof glazing market is also forecast to grow by 5 per cent. in 2008 before declining in 2009 and 2010. Within the roof glazing sub-sector,
public sector installations contracts are forecast to grow by approximately 17 per cent.
Windows & Shopfronts
Approximately 55 per cent. of the UK aluminium commercial glazing market in 2007 was attributed to the installation of windows and shop
fronts, where the Group has only partial exposure. The UK market for windows is expected to decline by an average annual rate of 2.8 per
cent. until 2012. The UK shopfront market is expected to undergo a period of contraction until 2011 whereupon some growth is forecast to
resume.
Growth Strategy
Revenue growth within the Group is expected to be driven primarily by the increased customer base that the Directors believe it can now
access and the increased size of projects that can now be undertaken. The Directors believe the Group's ability to add a number of 'value
added products' such as bomb blast glazing, solar shading, photovoltaics and electric power glass doors, to its main fa?e offering will
greatly enhance its offering and as a result the type of contracts that it will be able to undertake. Going forward, the Directors
anticipate that the manufacture of a number of these higher margin products will be completed 'in-house' for both internal and external
use.
The Directors believe that in the current UK economic climate, customers will seek enhanced comfort that their sub contractors/suppliers
have the financial strength to complete the work they have been contracted to deliver. The Directors believe that the Group's aforementioned
pre-eminent position in certain sectors, should give it an advantage when bidding for projects.
A number of the Group's customers are already active in overseas markets and the Directors expect to expand the level of business the
Group executes overseas. Space Decks had a long track record of operating in the US, Caribbean and Middle East and the Group is actively
tendering in some of these areas.
The Group's medium term strategy is centred on the acquisition and development of small-to-medium sized businesses that will assist the
Group's focus on energy efficient buildings and energy conservation. In the short term, the Directors believe that the Group's gross margins
can be improved through the synergies that have been created following the Group's formation. These include general cost savings, increased
external procurement strength and the market confidence which comes from dealing with a group rather than stand-alone companies.
Customers
The Group's customers span many of the disciplines in the construction process, from developers and architects to main contractors. The
key customer groups are laid out in the table below
Discipline Typical Customer
Developers Hammerson, Land Securities, Westfield, British Land, Henderson
Architects Fosters, Chapman Taylor, Wilkinson Eyre, RHWL, Aukett Fitzroy, Hopkins
Architects
Project Managers Mace, Turner & Townsend
Cost Consultants/Quantity Davis Langdon, EC Harris, Cyril Sweett, Gardiner & Theobold
Surveyors
Main Contractors Sir Robert McAlpine, Bovis Lend Lease, Westfield, HBG Construction,
Mace
Competition
Due to its varied product offering, the Group has a large number of both UK and European competitors.
The Directors believe that the Group's competition in large span glass roofs and bespoke vertical and inclined fa?es comes largely from
mainland Europe. Permasteelista SpA of Italy, in the Directors' view, is the dominant force in large projects across the UK and Europe.
Other European competitors include Waagner Biro AG, Metallbau Fr?d Seele Gmbh, all of Germany, Gig Fassadenbau of Austria, and Felix
Constructions SA of Switzerland. The majority of these competitors have their roots in structural steelwork, similar to that of SDSL.
The Directors believe that competition from UK companies is greater in respect of the more standardized curtain walling and structural
glazing market where the Group's main competitors in this area, in the Directors' opinion, are English Architectural Glazing, McMullan,
Parry Bowen, Charles Henshore of Scotland and Solaglass' contracting division. It is, however, important to note that based on industry
sources the Group's dependency on this more competitive sector of the market is lower than in the large span glass roofs and bespoke
vertical and inclined fa?es' sector.
Summary Financial Information
The Company has been recently incorporated and has not traded. Set out below is a summary of Melayway's audited financial information
for the three years ended 31 December 2007 and the unaudited interim results of Metic Solutions plc for the six months ended 30 June 2008
which has been extracted from the Admission Document:
Year Year Yea 6 months
ended ended ended ended 31
31 December 31 December 31 December December*
2005 2006 2007 2007
�000 �000 �000 �000
Revenue 5,572 7,993 14,737 6,729
Gross profit 1,739 2,304 3,752 2,148
Profit/(loss) before tax 356 474 1,103 (988)
Total equity 505 817 1,584 384
* Metic Solutions plc
All the financial information set out above is stated under IFRS.
Melayway's revenue for the year ended 31 December 2007 increased by 89 per cent. to approximately �14.7 million (2006: �7.8 million),
gross profit increased by 63 per cent. to approximately �3.8 million (2006: �2.3 million) and profit before taxation increased by 133 per
cent. to approximately �1.1 million (2006: �0.5 million). The increased level of revenue and profit reported by Melayway for the three
financial years ended 31 December 2007 was the result of Melayway winning more business and working on larger projects without having to
increase the cost base significantly, as well as the acquisition of SDSL in August 2007, such that SDSL contributed five months' trading to
Melayway's consolidated results for the year.
The Group's unaudited results for the six months ended 30 June 2008 included only four months of results for Melaway (including SDSL)
and three months of the business of Portal. The Group's revenue of �6.7m for the six months ended 30 June 2008 represents an increase of
approximately 22.6 per cent. compared to Melaway's performance (excluding SDSL) for the first six months of 2007. The Group's loss of �1.0m
for the six months ended 30 June 2008 was in line with the Directors' expectations and was primarily due to the fact that the business of
Portal was bought out of administration and the work profile was temporarily disrupted. The Group therefore had to cover the costs without
generating significant revenue. However, five of the six formal Portal contracts to which Melayway is now a party commenced in the second
half of 2008, which the directors believe will lead to an improved performance.
Current Trading and Prospects
Trading has been in line with the Directors' expectations. The Group has contracted projects due for delivery over the next 18 months of
�40 million. The Group's current work in progress includes projects at Stratford City, Nottingham Trent University, Broadmead Bristol,
Regent's Place London, White City Walls, Royal Bank of Trinidad and Flagship Trinidad. In addition, the Group is also currently actively
bidding on contracts with a value of up to �76 million of revenue including the Dubai Sports Centre roof and a public sector contract in
Kuwait.
The Directors believe that there is considerable scope for the further growth of the Group and that following the integration of
Melayway, SDSL and the business of Portal, the Group is well placed to increase its revenues and to exploit current market opportunities. In
addition, the Directors believe that Admission will lead to increased awareness of the Group and its activities and contribute to its
strategy of further consolidation of the industry. Whilst aware of the current economic climate both in the UK and other markets in which
the Group operates, the Directors are encouraged by the trading prospects of the Group both for the current financial year and for the
foreseeable future. Consequently, the Board views the Group's future with confidence.
Reasons for Admission
The Company is seeking Admission of its issued Ordinary Shares to trading on AIM principally to enable it to fund further growth in the
Group. Admission is also intended to enhance the Group's profile both with its customers and suppliers, and enable the Company to access
equity finance which may be required for the Company to continue its expansion, both organically and through selective acquisitions.
Furthermore, Admission will provide the Group's employees with the opportunity to participate in the future success of the Group and should
help the Group attract and retain high calibre staff.
Directors
The Board comprises three executive Directors and two non-executive Directors (including the non-executive Chairman).
Philip Marley, Non-executive Chairman, aged 36. Philip is the founder of Ely Property Group plc ("Ely"), one of the leading providers of
sale and leaseback investment property in Ireland. Ely floated on AIM in August 2005 and in July 2006 was acquired for �15.2 million by AIM
quoted Newcourt Group plc of which Philip is now a director. Philip is also the founder and managing director of Marley Media Limited, a
specialist student marketing company.
Stephen Field, Chief Executive Officer, aged 53, MA. Stephen has a degree in civil engineering from the University of London and he
started his career in the project management field, rising to senior project manager for Shell Oil. He was then appointed director of
construction for Conder Group with a specific responsibility for curtain wall projects. Stephen has over 20 years experience in the sector
in which the Group operates, and was previously managing director of Portal from 1990 to 1993. In 1993 Stephen became managing director of
three operating companies within Yule Catto plc, one of which, William Cox Ireland, is a designer and installer of curtain walling. He
joined Melayway in 1997 as
business development director. Stephen is co-founder and vice-chairman of BECA, the industry association for the curtain wall sector.
William Booth, Chief Financial Officer, aged 57, FCA. William began working on the concept of the Group with Philip Marley and Stephen
Field in May 2007. He was responsible for securing the acquisition of the business and certain assets of Space Decks and also negotiated the
options to acquire Melayway and the business of Portal. William was previously the practice manager at Peter Brett Associates a firm of
consulting engineers, a partner in The McInnes Partnership, a corporate finance boutique, and finance director of Booth Industries plc, a
firm of structural steelwork engineers. He qualified as an accountant in 1973.
Brian Winters, Executive director, aged 34. Brian has over 10 years, legal experience having worked in both private and public practice.
Brian currently acts as group solicitor for Ely Property Group Limited and has previously acted as in-house counsel to the Glenkerrin Group,
a property development group. In addition he has also worked in private practice with Noel Smyth & Partners and also with O'Rourke Reid
Solicitors.
Jeremy Saville, Non-executive Director, aged 58. Jeremy has 35 years international experience in the oil, telecoms and dairy industries,
primarily as a human resources director. He spent over 25 years with Shell International, living and working in the UK, USA, West Africa and
Australia. More recently he has worked for the UTSB Group in Malaysia and for Fonterra in New Zealand where he was group HR director. He has
an MA (Oxford) and is a Sloan Fellow (London Business School). Jeremy is also a non-executive director of AIM listed ZincOx resources plc.
DEFINITIONS
The following definitions apply throughout this announcement, unless the context requires otherwise:
"Admission" the admission of the issued share capital of the Company to trading on
AIM becoming effective in accordance with the AIM Rules
"Admission Price" 28.5p per share
"AIM" the market of that name operated by London Stock Exchange plc
"AIM Rules" the AIM Rules for Companies and the AIM Rules for Nominated Advisers
"AIM Rules for Companies" the AIM Rules for Companies published by the London Stock Exchange, as
amended from time to time
"AIM Rules for Nominated the AIM Rules for Nominated Advisers published by the London Stock
Advisers" Exchange, as amended from time to time
"Arbuthnot Securities" Arbuthnot Securities Limited, the Company's nominated adviser and
broker
"Aukett Fitzroy" Aukett Fitzroy Robinson group plc
"Board" or "Directors" the directors of the Company, whose names are set out above
"Bovis Lend Lease" Bovis Lend Lease Limited
"British Land" British Land Co plc
"Chapman Taylor" Chapman Taylor Limited
"Combined Code" the Combined Code on Corporate Governance issued by the Financial
Reporting Council
"Company" or "Metic" Metic Group plc, the holding company of the Group
"Cyril Sweet" Cyril Sweet Group Plc
"Davis Langdon" David Langdon & Seah International
"EC Harris" EC Harris LLP
"Fosters" Foster and Partners
"Gardiner & Theobold" Gardiner & Theobold LLP
"Group" the Company and its subsidiaries (as the case may be)
"Hammerson" Hammerson plc
"Henderson" Henderson Investment Limited
"HGB Construction" HGB UK Ltd
"Hopkins Architects" Hopkins Architects Limited
"Ireland" the Republic of Ireland
"IFRS" International Financial Reporting Standards
"Land Securities" Land Securities Group plc
"London Stock Exchange" London Stock Exchange plc
"Mace" Mace Group
"Melayway" Melayway Glass Assemblies Limited, a wholly owned subsidiary of Metic
Solutions
"Metic Solutions" Metic Solutions plc
"Ordinary Shares" the 55,378,284 ordinary shares of EUR0.0025 each in the capital of the
Company and "Ordinary Share" shall be construed accordingly
"Portal" Portal UK Limited
"RHWL" Renton Howard Wood Levin LLP
"Richard Rogers" Richard Rogers & Partners Limited
"SDSL" Space Decks Systems Limited
"Sir Robert McAlpine" Sir Robert McAlpine Limited
"Space Decks" Space Decks Limited
"Wilkinson Eyre" Wilkinson Eyre Architects
"Westfield" Westfield Group"
END
This information is provided by RNS
The company news service from the London Stock Exchange
END
MSCUUSNRWSRUUAA
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