| Mon 21 Jul 2008, 15:08 | | ESR - Esor Limited - Acquisition of the business conducted by Geo Compaction |
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ESR
ESR
ESR - Esor Limited - Acquisition of the business conducted by Geo Compaction
Dynamics (Pty) Limited and renewal of cautionary announcement
ESOR LIMITED
(Incorporated in the Republic of South Africa)
(Registration number: 1994/000732/06)
JSE code: ESR & ISIN: ZAE000078408
("Esor" or "the company")
ACQUISITION OF THE BUSINESS CONDUCTED BY GEO COMPACTION DYNAMICS (PTY) LIMITED
AND RENEWAL OF CAUTIONARY ANNOUNCEMENT
1. INTRODUCTION
Franki Africa (Pty) Limited ("Franki"), a wholly owned subsidiary of Esor, has
entered into an agreement ("the agreement") in terms of which it has acquired
the business conducted by Geo Compaction Dynamics (Pty) Limited ("Geo
Compaction") (excluding certain assets and liabilities) from Geo Compaction for
R18.045 million ("the transaction").
2. BACKGROUND INFORMATION
Geo Compaction was established in 2002. It specialises in geotechnical
contracting services to the civil engineering industry, including dynamic
compaction, percussion piling and permanent and temporary lateral support.
3. RATIONALE FOR THE TRANSACTION
The Geo Compaction business in conjunction with the Esor`s existing service
offering will enhance the Esor`s market share in terms of its expanded skills
and plant base. Esor has previously successfully undertaken projects with Geo
Compaction in Joint Venture relationships.
4. PURCHASE CONSIDERATION
The purchase consideration is R18.045 million to be settled in cash as follows:
an initial amount of R14.025 million on the closing date as defined in the
agreement; and
R4.02 million not later than 31 October 2008.
5. EFFECTIVE DATE
The effective date as per the agreement is 1 May 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 Esor to assess the
impact of the transaction on the earnings per share ("EPS"), diluted earnings
per share ("DEPS"), headline earnings per share ("HEPS"), net asset value per
share ("NAVPS") and net tangible asset value per share ("NTAVPS") of Esor. 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 Esor`s results and financial position after the transaction. The
unaudited pro forma financial effects are the responsibility of the directors of
Esor and are presented in a manner consistent with the accounting policies
adopted by Esor.
Before After Change
EPS (cents) 51.7 55.3 7.0%
DEPS (cents) 50.7 54.3 7.1%
HEPS (cents) 51.3 54.9 7.0%
NAVPS(cents) 160.3 160.3 -
NTAVPS (cents) 121.4 116.7 (3.94%)
Weighted average number 224 560 224 560
of shares in issue
(`000)
Diluted weighted average 228 677 228 677
number of shares in
issue (`000)
Shares in issue at 247 904 247 904
period end (`000)
Notes:
1 The information set out in the "Before" column is extracted from Esor`s
audited consolidated results for the year ended 29 February 2008.
2 EPS, DEPS and HEPS effects set out in the "After" column are based on the
following assumptions and information:
- the transaction was effective 1 March 2007;
- the purchase price of R18.045 million was paid in full on 1 March 2007
and funded by Esor utilising existing cash resources, with the
resultant reduction in interest earned calculated at 9% per annum (pre
tax);
- estimated transaction costs of R1.0 million have been expensed to the
income statement; and
- the total adjusted after tax profit attributable to the business
acquired is 9.258million for the year based on the audited annual
financial statements of Geo Compaction for the year ended 30 April
2008.
3 NAVPS and TNAVPS effects set out in the "After" column are based on the
following assumptions and information:
- the transaction was effective 29 February 2008;
- the purchase price of R18.045 million was paid on 29 February 2008 in
the manner described in note 2 above; 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 effective
purchase price over the net asset value of R6.552 million acquired
will comprise goodwill of R12.495 million, which goodwill is not
amortised.
7. CONDITIONS PRECEDENT
The transaction is conditional, inter alia, upon the following outstanding
conditions precedent:
Geo Compaction ceding and assigning its current contracts to Franki; and
compliance with any regulatory obligations to the extent required by law to
effect the transaction.
Warranties and indemnities as are normal in transactions of this nature have
been provided.
8. RENEWAL OF CAUTIONARY ANNOUNCEMENT
Shareholders are advised that negotiations unrelated to the above announcement
are still in progress, which, if successfully concluded, may have a material
effect on the price of the company`s securities. As a result, shareholders
should continue to exercise caution when dealing in the company`s securities
until a further announcement is made.
Johannesburg
21 July 2008
Designated Adviser
Exchange Sponsors (Pty) Limited
Transaction Adviser
Vunani Corporate Finance
Legal advisors
Kim Warren,Rambau & Assoc.
Date: 21/07/2008 15:08:02 Produced by the JSE SENS Department.
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