BUSINESS NEWS
10 Dec 08. Reed Elsevier withdrew its proposed sale of its Reed Business Information trade magazine arm amid deteriorating trading conditions and the subsidiary’s sharply reduced valuation. The RBI sale, one of the few live auctions in the media sector, was being watched closely as a bellwether for companies’ ability to dispose of assets and private equity’s ability to get deals done in tighter credit markets. Indications of interest for RBI, whose titles include Variety and New Scientist, fell from £1.3bn to £650m and were heading lower, according to two people familiar with the deal, as the economy weakened and RBI’s trading outlook deteriorated. Bain Capital and Apollo private equity firms were still in talks with Reed earlier this week but Bain was understood to have been increasingly sceptical about a bid. TPG pulled out of the auction last week. Negotiations are understood to have come unstuck over the deal’s debt-to-equity balance as well as on price. The Anglo-Dutch group had originally offered $330m in vendor financing as well as $1.2bn in staple financing to sweeten the deal. Staple financing is a pre-arranged debt package offered to potential bidders in an acquisition. (Source: FT.com)
BATTLESPACE Comment: BATTLESPACE understands that McGraw Hill was a partner in one of the bids and had their eye on Flight magazine to merge with Aviation Week. In troubled times for civil aviation in particular this would be a good consolidation. Now there are two weekly fighting for a slimmer slice of the cake.
10 Dec 08. Cohort has continued to make good progress during the first six months of this year. The SEA (Group) Ltd (SEA) acquired this time last year has had a strong first year in the Group. MASS Consultants Ltd (MASS) and Systems Consultants Services Ltd (SCS) both continued to grow their revenue and profits at good rates. In the six months ended 31 October 2008, Cohort achieved revenue of £33.9m (2007: £20.9m), a 62% increase. The revenue for the first half included £13.7m from SCS, which represented growth of 8% on 2007, £9.6m from MASS, an increase of 16%, and £10.6m from SEA (acquired 31 October 2007). The Group’s adjusted operating profit was £3.2m (2007: £1.4m). This included contribution from MASS of £1.3m (2007: £0.9m), SCS of £1.2m (2007: £0.9m) and from SEA £1.2m. SEA was acquired 31 October 2007 and hence no contribution for the six months ended 31 October 2007. The Group’s profit before tax and amortisation of other intangible assets was £2.9m (2007: £1.5m) after charging £0.2m (2007: £0.1m) in respect of the Group’s share of its joint venture undertaking, Advanced Geospatial Solutions Ltd (AGS). The future of the Group’s investment in AGS is currently under review. The adjusted earnings per share (before exceptional items and amortisation of other intangible assets) for the six months ended 31 October 2008 are 5.71 pence per ordinary share (2007: 4.12 pence). Net cash flow from operating activities was £1.2m (2007: £0.3m). Working capital increased in the first half but we expect it to reduce in the second half as deliveries are made. The period ended with the Group holding £1.8m of net debt, having paid £4.7m in cash for the deferred consideration of SEA, which was earned in full.
MASS
MASS has continued to perform well, producing a 47% increase in net profit from a 16% increase in revenue, over the same period last year. Good progress on the main MoD secure communications project contributed to a good performance in the Systems Development division, exceeding our expectations. MASS has also secured some important systems and electronic warfare business with some new key customers, including Thales and Saab. The order book of MASS at 31 October 2008 was £25.9m, underpinning £10.0m of second half revenue.
SCS
SCS revenue grew 8% over the same period in 2007, another creditable performance, delivering net profit of £1.2m, a growth of 35%. SCS has benefited from the investment made