REG - Senior PLC - Sale of Aerostructures business; Share Buy Back

SeniorAnnouncement

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RNS Number : 5777R  Senior PLC  18 July 2025

18 July 2025

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART IN, INTO OR
FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE
RELEVANT LAWS OF SUCH JURISDICTION

Senior plc

Sale of Aerostructures business and announcement of £40m share buyback
programme

Senior plc ("Senior" or the "Group"), an international manufacturer of high
technology components and systems, is pleased to announce that it has reached
a binding agreement to sell its Aerostructures business ("Aerostructures") to
Sullivan Street Partners, a UK-based mid-market private equity investor, for a
total enterprise value of up to £200m (the "Transaction").

Following completion of the Transaction, the continuing Group will be a high
quality, pure play fluid conveyance and thermal management ("FCTM") business:

 •    Differentiated products, combined with design-rich IP and expert know-how
 •    Well-positioned for growth, outperforming attractive and structurally
      resilient end markets
 •    Structurally higher operating margins
 •    Sustained profitable growth and lower capital intensity, driving improved
      returns and enhanced value for shareholders
 •    Stronger operational cash flow conversion, supporting investment in growth and
      shareholder returns

Transaction Highlights

 •    Sale of Aerostructures to Sullivan Street Partners for a total enterprise
      value of up to £200m, representing 13.1x 2024 EBITDA
 •    Initial consideration of £150m subject to customary completion adjustments
      and additional consideration of up to a maximum of £50m payable in H1 2026,
      contingent on the 2025 EBITDA((4)) performance of Aerostructures
 •    Expected upfront net cash proceeds of approximately £100m before transaction
      costs of approximately £12m.  Any additional consideration proceeds payable
      in H1 2026 to be received entirely in cash
 •    The transaction will be immediately accretive to Senior's adjusted operating
      profit margin and ROCE
 •    Initial net cash proceeds will be used to reduce net debt and to fund a £40m
      share buyback programme
 •    Transaction is expected to complete by the end of 2025, subject to the
      satisfaction of certain limited conditions and the receipt of customary
      regulatory approvals

David Squires, Chief Executive of Senior, commented:

"We are delighted to announce that we have reached a binding agreement for the
sale of our Aerostructures business to Sullivan Street Partners.  We are
confident that this sale aligns with the long-term interests of our
shareholders, customers, employees and other stakeholders.  This transaction
successfully positions Senior as a market-leading pure-play fluid conveyance
and thermal management business, delivering in line with our strategy.  The
Aerostructures business is well positioned to prosper and grow and we wish our
colleagues there every success in the future.  Our remaining high quality
fluid conveyance and thermal management business is well positioned to deliver
attractive growth, improved margins, and better returns on capital with strong
operating cash flow performance.  With our global footprint and operating in
attractive and structurally resilient end markets, Senior is well-placed to
deliver sustained profitable growth and create enhanced value for our
shareholders."

Strategic Rationale

The sale of our Aerostructures business reflects our stated strategy to
position Senior as a market leading pure play fluid conveyance and thermal
management business.  The sale of Aerostructures is in the best interests of
shareholders and other stakeholders because it:

 •    Simplifies the Group and allows it to focus on its high quality,
      differentiated products, combined with design-rich IP and expert know-how
 •    Positions Senior to operate in attractive and structurally resilient end
      markets
 •    Improves the financial position and performance of the Group, delivering:

      o   structurally higher operating margins

      o   a reduction in the Group's net debt including removal of the lease
      liabilities associated with Aerostructures

      o   stronger operational cash flow conversion with lower capex and working
      capital investment requirements

      o   improved returns on capital employed
 •    Provides optionality both for investment in growth and shareholder returns in
      line with our capital allocation priorities.

Following completion of the Transaction and as set out at the Investor Event
held in March 2025, the Group's medium-term financial targets are:

 •    Group adjusted((1)) operating margins: at least double-digit margins

      o   Aerospace: at least mid-teens

      o   Flexonics: 10%-12%
 •    Cash conversion((2)) target: greater than 85% through the cycle
 •    ROCE((3)): 15-20%

These targets are underpinned by a strong balance sheet, with leverage at 0.5x
to 1.5x and supported by an expectation of mid-single digit organic revenue
growth through the cycle.

Key Transaction Terms

The Transaction values the Aerostructures business at an enterprise value
("EV") of up to £200m on a debt-free cash-free basis, which represents 13.1x
2024 EBITDA.  The total EV consists of an initial consideration of £150m,
which is expected to generate net cash proceeds of approximately £100m after
deducting customary completion adjustments including IFRS 16 lease liabilities
and other debt like items and before payment of approximately £12m
transaction related costs.  Additional cash consideration of up to a maximum
of £50m is payable in H1 2026, contingent upon the 2025 EBITDA((4))
performance of Aerostructures.

Further details on the terms of the disposal are set out in Appendix II.

Use of Net Proceeds

The initial net cash proceeds arising from the Transaction is expected to be
approximately £100m before payment of £12m transaction related costs.
 Consistent with our capital allocation policy these proceeds will be used to
reduce net debt and fund a c.£40m share buyback programme.  The buyback will
commence upon completion of the Transaction and receipt of the proceeds.

The application of any additional cash proceeds that might become payable will
be determined at the time, in line with our capital allocation priorities.

Transaction Effects on Senior

Following the completion of the Transaction, Senior will have 19 operating
businesses, including one joint venture, located in 10 countries.  The
principal markets of Senior's FCTM business will be aerospace & defence,
land vehicle and power & energy, and adjacent markets such as
semi-conductor equipment and medical.  Senior's FCTM business will design and
manufacture products for blue-chip customers in these attractive and
structurally resilient end markets.

Detailed below is the effect of the Transaction on Senior's continuing
business (without Aerostructures) based on 31 December 2024 numbers.

 FY24                                                          Senior including  Senior pro forma

Aerostructures
 Revenue                                                       £977.1m           £707.4((5))m
              Aerospace Revenue                                £660.8m           £391.1m
              Flexonics Revenue                                £317.7m           £317.7m
 Adjusted Operating Profit                                     £46.5m            £53.0m
              Aerospace Adjusted Operating profit              £30.4m            £36.9m
              Flexonics Adjusted Operating profit              £35.1m            £35.1m
 Adjusted Operating Margin                                     4.8%              7.5%
              Aerospace Adjusted Operating margin              4.6%              9.4%
              Flexonics Adjusted Operating margin              11.0%             11.0%

The effect of the Transaction on the assets and liabilities of Senior is
covered in Appendix I.

Board Recommendation

The Transaction is, in the Board's opinion, in the best interests of
shareholders and other stakeholders of the Group as a whole, reflecting good
value for Aerostructures and delivery in line with the Group's stated
strategy.

Next Steps and Timing

The Transaction is expected to complete by the end of 2025, subject to the
satisfaction of certain limited conditions and the receipt of certain
customary regulatory approvals.

Summary Information on Aerostructures

Aerostructures manufactures precision-machined airframe and aero engine
components and complex assemblies for commercial aerospace, defence and space
applications.

Aerostructures consists of 5 operating businesses across 7 sites located in
the US, UK, Thailand and Malaysia and employs c.1,800 individuals (as at
31(st) December 2024).  In FY24, Aerostructures contributed revenue of £272m
and an operating loss of £(6.5)m to the Group.  The gross assets of the
Aerostructures business as at 31 December 2024 were £273.8m.  Appendix I
includes historical financial information on Aerostructures.

Aerostructures is managed by experienced general managers at each site: Jerry
Goodwin at Senior Aerospace AMT / Damar; Damon Evans at Senior Aerospace Jet /
Ketema; Kavan Singh at Senior Aerospace UPECA; Simon Shale at Senior Aerospace
Thailand; and Annette Weekes at Senior Aerospace Weston.

Additional Information

The Transaction is classified as a significant transaction under the UK
Listing Rules.  As such, this announcement is made in accordance with
Senior's disclosure obligations pursuant to Chapter 7 of the UK Listing Rules.

Unless otherwise stated, all financial information relating to Senior and
Aerostructures disclosed in this announcement (including the Appendices) has
been extracted, without material adjustment, from Senior's consolidated
Full-Year 2024 audited financial statements, on the bases and assumptions set
out therein.

This announcement contains inside information for the purposes of Article 7 of
the Market Abuse Regulation (EU) No 596/2014 as it forms part of domestic UK
law as defined in the Market Abuse (Amendment) (EU Exit) Regulations (SI
2019/310).

The person responsible for arranging for the release of this announcement on
behalf of Senior is Andrew Bodenham, Company Secretary.

Notes

 (1)  Adjusted operating margin is the ratio of adjusted operating profit to
      revenue.  Adjusted operating profit excludes items ("Adjusting items") that
      are considered outside the normal course of management oversight and control
      on a day-to-day basis and are not reflective of in-year trading performance.
 (2)  Operating cash flow divided by adjusted operating profit.  Operating cash
      flow is net cash from operating activities after investment in capital
      expenditure and excludes adjusting items, but before interest and tax.
 (3)  Return on capital employed (ROCE) is the Group's adjusted operating profit
      divided by the average of the capital employed at the start and end of the
      period, capital employed being total equity plus net debt.
 (4)  Net debt (excluding capitalised leases) to EBITDA is a defined covenant ratio
      for the Group's committed borrowing facilities.  EBITDA, in the context of
      this covenant ratio, is adjusted profit before tax and before interest,
      depreciation, amortisation and profit or loss on sale of property, plant and
      equipment.  It also excludes EBITDA from businesses which have been disposed
      and includes 12 months EBITDA for businesses acquired and it is based on
      frozen GAAP (pre-IFRS 16).  EBITDA, in the context of the performance of
      Aerostructures, is defined as adjusted profit before tax and before interest,
      depreciation, amortisation and profit or loss on sale of property, plant and
      equipment.
 (5)  Senior pro forma revenue figure includes £2.7m revenue between Aerostructures
      and FCTM.

About Senior

Senior is a FTSE 250 international engineering and manufacturing Group with
operations in 12 countries.  It is listed on the main market of the London
Stock Exchange (symbol SNR).  Senior's Purpose is "we help engineer the
transition to a sustainable world for the benefit of all our stakeholders".
 Senior designs and manufactures high technology components and systems for
the principal original equipment producers in the worldwide aerospace &
defence, land vehicle and power & energy markets.  Further information on
Senior plc may be found at: www.seniorplc.com (http://www.seniorplc.com)

Conference call details

A conference call for investors and analysts will be held at 08:30 BST on
Friday 18 July 2025.

To participate in the Conference Call, register using the link below:

 https://www.netroadshow.com/events/login/LE9zwo4BXlotOWuX7IVYp5Oo10xHCCxkmHM
(https://www.netroadshow.com/events/login/LE9zwo4BXlotOWuX7IVYp5Oo10xHCCxkmHM)

Operator Assisted Dial-In:

United Kingdom (Local): +44 20 3936 2999

United Kingdom (Toll-Free): +44 808 189 0158

Global Dial-In Numbers

Access Code: 400931

Enquiries

 Senior plc
 Alpna Amar, Chief Financial Officer                                           +44 (0) 1923 714 725
 Gulshen Patel, Director of Investor Relations & Corporate Communications      +44 (0) 1923 714 722
 Lazard (Financial Adviser to Senior plc)                                      +44 (0) 207 187 2000
 Richard Shaw and James Cliffe
 FGS Global (Financial PR)                                                     +44 (0) 7796 708 551
 Richard Webster-Smith

Appendix I

Key Historical Financial Information on Aerostructures

Income Statement

                                 31-Dec-24  31-Dec-23

£m
£m
 Revenue                         272.4      253.5
 Cost of Sales                   (254.5)    (241.1)
 Gross profit                    17.9       12.4
 Distribution costs              (1.5)      (1.4)
 Administrative expenses         (22.9)     (24.4)
 Profit on sale of fixed assets  -          0.1
 Operating loss                  (6.5)      (13.3)
 Finance costs                   (2.7)      (2.7)
 Loss before tax                 (9.2)      (16.0)
 Tax (charge)/credit             (0.2)      1.6
 Loss for the period             (9.4)      (14.4)

Balance Sheet

                                 31-Dec-24

£m
 Non-current assets
 Other intangible assets         1.4
 Property, plant and equipment   130.5
 Deferred tax                    2.5
 Total non-current assets        134.4
 Current assets
 Inventory                       88.7
 Trade and other receivables     40.0
 Current tax receivable          1.8
 Cash and cash equivalents       8.9
 Total current assets            139.4
 Total Assets                    273.8

 Current liabilities
 Trade and other payables        (60.1)
 Lease liabilities               (5.7)
 Total current liabilities       (65.8)

 Non-current liabilities
 Intercompany loans net          (3.3)
 Retirement benefit obligations  (1.2)
 Lease liabilities               (33.6)
 Others                          (2.1)
 Total non-current liabilities   (40.2)
 Total Liabilities               (106.0)
 Net Assets                      167.8

Appendix II

OTHER INFORMATION

Risk Factors

The Transaction may not proceed to completion if conditions to which it is
subject are not achieved or waived (as applicable).  If the Transaction does
not proceed to completion, Senior will not realise the expected benefits from
the Transaction and the operations and management of Aerostructures may be
disrupted.

Senior may incur liability under the Transaction documentation, which: (i)
contains customary warranties and indemnities; and (ii) contains obligations
for Senior to provide certain limited services to Aerostructures following
completion of the Transaction.

Legal and arbitration proceedings

Significant litigation of the retained Senior group

There are no governmental, legal or arbitration proceedings (including any
such proceedings which are pending or threatened of which Senior is aware),
during the period covering the 12 months preceding the date of this
announcement, which may have, or have had in the recent past, significant
effects on the financial position or profitability of the retained Senior
group.

Significant litigation of Aerostructures

There are no governmental, legal or arbitration proceedings (including any
such proceedings which are pending or threatened of which Senior is aware),
during the period covering the 12 months preceding the date of this
announcement, which may have, or have had in the recent past, significant
effects on the financial position or profitability of Aerostructures.

Material Contracts

Material contracts of the retained Senior group

No contracts have been entered into by the retained Senior group (not being
contracts entered into in the ordinary course of business): (i) within the
period of two years immediately preceding the date of this announcement that
are, or may be, material to the retained Senior group; or (ii) that contain
any provisions under which the retained Senior group has any obligation or
entitlement that is, or may be, material to the retained Senior group, save as
disclosed below:

Aerostructures sale and purchase agreement

On 17 July 2025, Senior Operations LLC, Senior UK Limited, Senior Engineering
Investments Limited, Upeca Technologies Sdn. Bhd. (the "Selling Senior
Entities") and the purchasing entities of Sullivan Street Partners entered
into a sale and purchase agreement for the sale of Aerostructures (the "SPA").

The initial consideration is £150m, subject to customary completion accounts
adjustments, and additional earn-out consideration of up to a maximum £50m is
also payable contingent upon the achievement of a target EBITDA threshold by
Aerostructures in the period from 1 January 2025 to 31 December 2025.

The transaction is subject to certain conditions, including receipt of certain
customary regulatory approvals.  The transaction comprises a sale of the
assets of the US businesses Senior Aerospace AMT / Damar, Senior Aerospace Jet
/ Ketema; the assets of the UK business Senior Aerospace Weston; all of the
issued shares held in Upeca Aerotech Sdn. Bhd (Malaysia); and all of the
issued shares held in Senior Aerospace (Thailand) Limited.

Under the terms of the agreement, the Selling Senior Entities gave customary
fundamental warranties for a transaction of this nature, including as to
capacity and title, and received customary warranties in return from the
purchasing entities.  Warranty and indemnity insurance is in place in respect
of the business warranties given by the Selling Senior Entities under the SPA
and the Selling Senior Entities' liability in relation to those warranties is
capped at £1.

The Selling Senior Entities have given indemnities in respect of certain
matters relating to Aerostructures prior to completion, including in respect
of certain environmental, tax, and pensions matters.  Such indemnities are
subject to limitations with regards to quantum and time period.

The Selling Senior Entities have agreed to provide certain limited services to
Aerostructures for a limited period following completion in consideration for
service charges.

The SPA is governed by English law.

US Private Placement Notes

On 14 February 2025, Senior entered into a note purchase agreement (the "NPA")
under which it issued $40m 5.46% Senior Notes due 24 February 2029 (the
"Private Placement Notes") which was supported by guarantees given by certain
group entities to support Senior's obligations in relation to the NPA and the
Private Placement Notes.

The proceeds of the Private Placement Notes were applied to refinance the
maturing £27m US private placement notes and thereafter towards general
corporate purposes.

The NPA is governed by New York law.

US revolving credit facility amendment and restatement agreement

On 16 June 2025, Senior Operations LLC entered into an amendment and
restatement agreement relating to Senior's $50m revolving credit facility,
which was originally entered into in 2011.  Under the terms of the amendment
and restatement agreement, the term of the US revolving credit facility has
been extended by one year and will now mature on 30 June 2027.

Material contracts of Aerostructures

No contracts have been entered into by Aerostructures (not being contracts
entered into in the ordinary course of business): (i) within the period of two
years immediately preceding the date of this announcement that are, or may be,
material to Aerostructures; or (ii) that contain any provisions under which
Aerostructures has any obligation or entitlement that is, or may be, material
to Aerostructures.

Significant Change

There have been no significant changes in the financial position of the
retained Senior group since 31 December 2024, the end of the last financial
period for which audited financial statements have been published.

There have been no significant changes in the financial position of
Aerostructures since 31 December 2024, the date to which the historical
financial information relating to Aerostructures in Appendix to this
announcement was prepared.

Related Party Transactions

Save as disclosed in Senior's previously published annual reports and
financial statements, Senior has not entered into any related party
transactions that are relevant to the Transaction during the period since 31
December 2024, the end of the last financial period for which audited
financial statements have been published.

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