20/04/2022 - 15:25

Newly-listed SSH moves on $15m acquisition

20/04/2022 - 15:25

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Belmont-based SSH Group is looking to bolster its equipment division and its bottom line by taking on an established mining and civil machine hire business in the Pilbara.

Newly-listed SSH moves on $15m acquisition
Left to right: Stefan Finney, SSH COO; Daniel Cowley-Cooper, SSH MD; Phil & Tammie Patterson, KMH Founders; Steve Griffiths, KMH Manager; Matthew Thomson, SSH CFO

Belmont-based SSH Group is looking to bolster its equipment division and its bottom line by taking on an established mining and civil machine hire business in the Pilbara.

SSH, which listed on the ASX in September last year in a $6.25 million initial public offering, informed the market this morning that it had entered a binding agreement to acquire Karratha Machinery Hire (KMH).

Karratha-based KMH - which refers to itself as the Pilbara’s largest “home grown” plant hire company - has more than 140 pieces of machinery on its books valued at more than $10 million.

It was founded in 1989 and has since built a client base providing mining and civil project machinery hire services to the likes of MACA, Monadelphous and NRW.

Under the proposed deal, SSH would acquire all KMH’s business assets for $15 million with $10.5 million of that payable in cash to cover the hire equipment.

The remaining $4.5 million will be a split of cash and SSH shares.

It comes after SSH bought Site Services Holdings – a security and labour hire services business – in tandem with its IPO last year.

In its rationale for the buy, SSH said acquiring KMH would allow for rapid expansion of its equipment division and mark the start of a “significant growth period” for the company.

Finances

KMH operates with much higher profit margins compared to SSH’s established labour and safety services business.

The 30-year old company reported unaudited revenue of $6.3 million and underlying earnings (EBITDA) of $3.83 million for the year to 30 June 2021.

By comparison, SSH had underlying earnings of $2.4 million on revenue of $70.5 million.

The $15 million purchase price is roughly 4 times KMH's FY21 EBITDA.

KMH will operate as a wholly-owned subsidiary of SSH and be overseen by KMH’s existing management team.

“The transformational acquisition of Karratha Machinery Hire (“KMH”) represents a highly synergistic and earnings accretive acquisition that is in line with our stated intention to acquire quality businesses with strong foundations,”  SSH Group managing director Daniel Cowley-Cooper said.

“Not only will the acquisition represent an immediate improvement to the revenues and profits of the SSH Group, we also expect to generate significant synergies from the ability to offer our existing clients and those of KMH with a complete and holistic offering of services that should lead to increased margins and revenue.”

SSH shares closed the day up 6.25 per cent to trade at 26 cents.

 

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