Oct 31, 2014

Daifuku to Acquire New Zealand‐based BCS Group Limited

October 30, 2014

Daifuku Co., Ltd. (“Daifuku”) announced today it has entered into an agreement to purchase an 80% of the total number of outstanding shares of BCS Group Limited (headquartered in Auckland, New Zealand; “BCS”) (“Share Transfer”), pursuant to the resolution passed at a meeting of the board of directors held on October 30, 2014. Under the agreement, BCS will operate as a subsidiary of Daifuku.

1. Purpose of the acquisition

The Daifuku Group (“the Group”) positions the airport baggage handling business as one of its core businesses. The airport baggage handling business is operated mainly by two Group companies; Jervis B. Webb Company (headquartered in the U.S.), operating mostly in North America, and Daifuku Logan Ltd. (headquartered in the United Kingdom), operating mostly in Europe. The Group seeks to expand this business by increasing orders and profitability through proposal‐based marketing, cost reduction in production and procurement, and comprehensive project management. Meanwhile, BCS was highlighted as a company that would be an ideal partner in the airport baggage handling business in terms of sales territory, customer base, and products. The Group has negotiated the transfer of BCS’s shares to expand and enhance its business in an efficient manner.

BCS, Oceania’s leading company in the airport baggage handling sector, has expanded its business into rapidly developing Southeast Asia. BCS customers include some of the world’s leading airlines and airports, and the growth of low cost airlines in Asia has contributed significantly to the company’s growth. BCS employs about 400 staff across its group sites, which include six countries mainly in Oceania and Southeast Asia. BCS features a significant network in the aviation sector and high capabilities in system integration. In addition, BCS is a developer of a revolutionary 3D software package, with three functions enabling virtual airport simulation, operational analysis and complete pre‐installation testing of low‐ and high‐level control systems via virtual commissioning, and operations via 3D SCADA*. With its IT solution‐based marketing, BCS differentiates itself from the competition. Making effective use of these products in seeking orders, installations, and operations/maintenance after delivery, BCS has achieved positive results. Moreover, the BAGgate™ system for baggage self‐service check‐ins, developed by BCS, is used by several airports and provides significant opportunity for future growth.

With BCS joining the Group, growth is expected in the Asian market, where the Group has few installation records and the increased demand for airport construction is estimated. By integrating BCS’s capabilities in marketing and software development with Jervis B. Webb and Daifuku Logan, the Group will expand its global sales in the airport baggage handling business and enhance differentiation from its competitors.

In addition, BCS has expanded its business into the integration of automated sortation systems for parcel delivery centers, which are rapidly growing in Oceania and Southeast Asia, and has already delivered large systems to major companies in Australia. The Group’s Factory and Distribution Automation Operations, which sells automated warehouses and picking systems for distribution centers, will also collaborate with BCS.

  • *SCADA: Supervisory Control and Data Acquisition, a control and monitoring system

2. Overview of the entity to be acquired

  1. Name: BCS Group Limited
  2. Address
    Unit F, 7 Orbit Drive, Albany, Auckland 0632 New Zealand
  3. Representative: Patrick Teo, CEO
  4. Business
    Provides manufacture, sales and after‐market services of baggage handling systems for airports and sortation systems for parcel delivery centers
  5. Paid‐in capital
    508 million yen (5,711 thousand NZ dollars) (as of June 30, 2014)
  6. Established: September 27, 1993
  7. Major shareholders and ratio of shareholding
    Teo Family Trust, and individual shareholders including the Trust owners, founders, and their families: 100%
  8. Relationship with Daifuku
    Capital relationship: None
    Personnel relationship: None
    Business relationship: None
  9. Consolidated financial results of the subsidiary to be acquired for the last three years

Unit: Million yen
(Thousand NZD)

Overview of the entity to be acquired
Fiscal year ended June 2012 June 2013 June 2014
Net assets 848
(9,541)
1,053
(11,839)
1,330
(14,956)
Total assets 2,262
(25,430)
3,567
(40,093)
4,504
(50,624)
Net assets per share 142.4
(1.60)
187.3
(2.10)
248.3
(2.79)
Net sales 5,481
(61,613)
7,392
(83,094)
12,352
(138,837)
Operating income 328
(3,696)
409
(4,604)
545
(6,133)
Ordinary income 311
(3,505)
380
(4,273)
513
(5,773)
Net income 202
(2,276)
255
(2,872)
413
(4,652)
Net income per share 33.9
(0.38)
45.4
(0.51)
77.2
(0.86)
*You can scroll horizontally.

Notes:
(1) Figures in “5) Paid‐in capital” and “9) Financial results of the subsidiary to be acquired for the last three years” are converted using the exchange rate as of June 30, 2014 (88.97 Japanese yen = NZD 1).
(2) Figures in the above table are based on accounting standards in New Zealand.

3. Overview of the transferee

  1. Name
    Teo Family Trust, and individual shareholders including the Trust owners, founders, and their families: 100%
  2. Relationship between Daifuku and the relevant person
    Daifuku and the relevant person (including his relatives, any companies or subsidiaries majority‐owned by the relevant person and/or his relatives) have no significant capital relationship, personal relationship or business relationship. Furthermore, Daifuku, and any related parties and affiliates of the company have no significant capital relationship, personal relationship or business relationship with the relevant local representative, and any related parties and affiliates of the relevant local representative.

4. Number and cost of shares acquired, and ownership of shares before and after the transfer

  1. Ownership of shares before the transfer: 0 shares
    (Number of voting shares: 0)
    (Shareholding ratio: 0%)
  2. Number of shares to be acquired: 4,286,990 shares
    (Number of voting shares: 4,286,990)
  3. Number of shares after the acquisition: 4,286,990 shares
    (Number of voting shares: 4,286,990)
    (Shareholding ratio: 80%)

Notes: The purchaser is obliged to withhold the amounts of the shares acquired in keeping with the strong intention of the selling party.

5. Timeline

  1. Board resolution: October 30, 2014
  2. Share purchase agreement: October 30, 2014
  3. Completion of Share Transfer: December 2014 (scheduled)

Notes: The Share Transfer is scheduled on December 2014, however, when it is required that the procedures under the competition laws in related jurisdictions are completed, the date of the Share Transfer may change accordingly.

6. Expected impact of earnings

Daifuku will consolidate the balance sheets of BCS into its results at the end of the fiscal year ending March 31, 2015 and will consolidate the results of BCS including the statements of income in the fiscal year ending March 31, 2016. The influence on Daifuku’s results for the fiscal year ending March 2015 arising from this acquisition will be minor.

Reference:
Consolidated earnings forecast for the fiscal year ending March 31, 2015 (announced on August 8, 2014) and consolidated results for the previous fiscal year

(Million yen)

Expected impact of earnings
  Net sales Operating
income
Ordinary
income
Net income
Year ending
March 2015
270,000 14,000 14,300 8,800
Year ended
March 2014
241,811 12,556 13,191 7,740
*You can scroll horizontally.

About Daifuku Co., Ltd.
Daifuku Co., Ltd. is the world’s top manufacturer and supplier of automated material handling systems and software to the automotive, airport, semiconductor and LCD equipment, and general industry markets. Daifuku is headquartered in Osaka, Japan, with sales and service offices throughout the world. The Company was founded in 1937.

About BCS Group Limited
BCS is a synergistic group of technology companies with its headquarters in Auckland, New Zealand. BCS core business operates in the aviation sector with complimentary business in the adjacent verticals of logistics and industrial. Founded in 1993, its expertise lies in hardware solutions, automation controls and smart in-house software solutions, which has made BCS supplier of choice to airports, airlines, freight and industrial customers across Australia and around the globe.