| Mon 9 Jun 2008, 15:23 | | PSV - PSV Holdings - Acquisition And Withdrawal Of Cautionary Announcement |
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PSV
PSV
PSV - PSV Holdings - Acquisition And Withdrawal Of Cautionary Announcement
PSV HOLDINGS LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1998/004365/06)
JSE code: PSV
ISIN: ZAE000078705
("PSV" or "the company")
ACQUISITION OF RAND AIR AND GAS INSTALLATION (PTY) LIMITED ("RAND AIR") AND
WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT
1. INTRODUCTION
Further to the cautionary announcements, dated 25 February 2008, 19 March 2008
and 30 April 2008, shareholders are advised that an agreement, dated 6 June
2008, has been entered into between Messrs. RA Gullett and AR Sparrow ("the
shareholders and vendors") and PSV ("the agreement") in terms of which PSV will
acquire the entire issued share capital and loan accounts of Rand Air for a
maximum purchase consideration of R18 million ("the transaction").
2. BACKGROUND INFORMATION
PSV is an industrial engineering holding company currently comprising the
following three operating business segments in South African and Africa:
- Pumps, spares and valves;
- Engineering linings and general industrial supplies; and
- Petrochemical.
Rand Air is a primary manufacturer and distributor of specialised liquefied gas
storage equipment in South Africa. Use is made of specialised cryogenic
technology to store and transport a variety of gasses for various applications.
3. RATIONALE FOR THE TRANSACTION
The transaction will expand PSV`s speciality engineering, product, manufacturing
and distribution base.
4. PURCHASE CONSIDERATION
The purchase consideration is R18 million to be settled in cash as follows:
- an initial amount of R5.4 million on the closing date as defined in the
agreement. Should the closing date occur after 1 August 2008, the initial
amount shall accrue interest from that date up to and including the date of
payment at 5% per annum;
- R6.3 million not later than 14 June 2009;
- R4.5 million not later than 15 June 2010; and
- R1.8 million not later than 15 June 2011.
5. EFFECTIVE DATE
The effective date as per the agreement is 1 March 2008 subject to the
successful fulfilment of the conditions precedent set out in paragraph 7 below.
6. UNAUDITED PRO FORMA FINANCIAL EFFECTS
The unaudited pro forma financial effects set out below are provided for
illustrative purposes only to assist the shareholders of PSV to assess the
impact of the transaction on the earnings per share ("EPS"), headline earnings
per share ("HEPS"), diluted earnings per share ("DEPS"), diluted headline
earnings per share ("DHEPS"), net asset value per share ("NAVPS") and net
tangible asset value per share ("NTAVPS") of PSV. These unaudited pro forma
financial effects have been disclosed in terms of the JSE Listings Requirements
and because of their nature may not give a fair presentation of the PSV`s
results and financial position after the transaction. The unaudited pro forma
financial effects are the responsibility of the directors of PSV and are
presented in a manner consistent with the accounting policies adopted by PSV.
Before After Change
EPS (cents) 14.2 15.6 9.9%
HEPS (cents) 8.0 9.4 17.5%
DEPS (cents) 14.0 15.4 10.0%
DHEPS (cents) 7.9 9.3 17.7%
NAVPS(cents) 91.5 91.3 -0.2%
NTAVPS (cents) 30.3 24.6 -18.8%
Weighted average number 200,269 200,269
of shares in issue (000)
Diluted weighted average 202,922 202,922
number of shares in
issue (000)
Shares in issue at 221,332 221,332
period end (000)
Notes:
1 The EPS, HEPS, DEPS, DHEPS, NAVPS and NTAVPS, as set out in the "Before"
column of the table, are extracted from PSV`s reviewed abridged results for the
year ended 29 February 2008.
2 EPS and HEPS effects are based on the following assumptions and information:
- the transaction was effective 1 March 2007;
- the purchase price of R18 million was paid in full on 1 March 2007 and funded
by PSV assuming additional borrowings of R18.0 million incurring interest at 14%
per annum (pre tax); and
- the total after tax profit attributable to the Rand Air is R4.6 million for
the year based on the audited annual financial statements of Rand Air for the
eight months ended 29 February 2008 prorated for one year.
3 NAVPS and TNAVPS effects are based on the following assumptions and
information:
- the transaction was effective 29 February 2008;
- the purchase price of R18 million was paid on 29 February 2008 in the manner
described in note 2 above;
- estimated transaction costs of R0.4 million have been accounted for against
share premium; and
- the revaluations and allocations that may arise from the application of IFRS 3
(Business Combinations) have not been made as this will only be finalised in due
course. The pro forma financial information has thus been prepared on the basis
that the excess of the purchase price over the net asset value of Rand Air of
R5.7 million will comprise goodwill, which goodwill is not amortised.
7. CONDITIONS PRECEDENT AND OTHER CONDITIONS
The transaction is conditional, inter alia, upon:
the completion of a satisfactory due diligence by PSV by 15 July 2008; and
compliance with any regulatory obligations to the extent required by law to
effect the transaction, including, if appropriate, approval of the Competition
Commission.
If the net profit after tax earned by Rand Air for the year ending 28 February
2009 is less than R1.7 million, PSV has the right to resile from the agreement.
Warranties and indemnities as are normal in agreements of the nature have been
provided.
8. CLASSIFICATION OF THE TRANSACTION
The transaction is classified as a Category 2 transaction, with no related
parties, in terms of the Listing Requirements of the JSE Limited.
9. WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT
Shareholders are advised the caution is no longer required when dealing in the
company`s securities.
Edenvale
9 June 2008
Designated Adviser
Vunani Corporate Finance
Date: 09/06/2008 15:23:01 Produced by the JSE SENS Department.
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