| Fri 19 Dec 2008, 15:00 | | EOH - EOH Holdings Limited - Acquisition by EOH of the business of Highveld PFS |
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EOH
EOH
EOH - EOH Holdings Limited - Acquisition by EOH of the business of Highveld PFS
EOH HOLDINGS LIMITED
Incorporated in the Republic of South Africa
(Registration number 1998/014669/06)
Share code: EOH ISIN: ZAE000071072
("EOH" or "the company")
ACQUISITION BY EOH OF THE BUSINESS OF HIGHVELD PFS
1 INTRODUCTION
EOH shareholders are advised that agreement has been reached with Rothwell
International (SA) (Proprietary) Limited trading as Highveld PFS
(``Highveld``) to acquire the business of Highveld (``the acquisition``).
2 THE ACQUISITION
2.1 Nature of the Highveld business
Based in Pretoria, Highveld is a contract management business and
registered Labour Broker that provides financial, taxation and
administrative services to contractors and staff resourcing to some of
its clients.
2.2 The rationale for the acquisition
The acquisition enables EOH to grow its combined resourcing businesses
and to place more skills into the market place. It further provides
EOH with a resource base of contractors for its other businesses and
the opportunity to further skill resources through EOH`s training
facility, EOH Academy.
2.3 Purchase consideration
The maximum purchase consideration of R70 million as at the effective
date of the acquisition, which is warranted by profit warranties of
R16 million and R18 million net profit after tax in year one and year
two respectively, will be settled by way of a cash consideration of
R37 million and the issue of 4 400 000 EOH shares, valued at R33
million at the effective date of the acquisition. Settlement will be
effected in equal tranches being, one third of cash and shares within
14 days of the transfer date (ie 7 days after the fulfilment of the
conditions precedent) and a further one third each of cash and shares
within 30 days of the issuance of the auditors` certificate at the end
of the first and second warranty periods.
In the event that the profit warranties in year one and/or year two
are not met, settlement shall be pro rata to the actual net profit
after tax achieved.
2.4 Conditions precedent and effective date
The acquisition is conditional upon fulfilment prior to 28 February
2009 of, inter alia, compliance with any regulatory bodies to effect
the acquisition, including, the Competition Commission and, insofar as
may be necessary, the JSE Limited ("JSE") and the Securities
Regulation Panel.
The effective date of the acquisition is 1 August 2008.
3 PRO FORMA FINANCIAL EFFECTS OF THE ACQUISITION
The table below sets out the unaudited pro forma financial effects of the
acquisition, on EOH`s earnings per share, headline earnings per share, net
asset value per share and tangible net asset value per share.
The unaudited pro forma financial effects have been prepared to illustrate
the impact of the acquisition on the reported financial information of EOH
for the year ended 31 July 2008, had the acquisition occurred on 1 August
2007 for income statement purposes and on 31 July 2008 for balance sheet
purposes.
The unaudited pro forma financial effects have been prepared using
accounting policies that comply with International Financial Reporting
Standards and that are consistent with those applied in the reviewed
results of EOH for the year ended 31 July 2008.
The unaudited pro forma financial effects, which are the responsibility of
the directors, are provided for illustrative purposes only and, because of
their pro forma nature may not fairly present EOH`s financial position,
changes in equity, results of operations or cash flow.
Before the After the Percen-tage
acquisition acquisition change (%)
Basic earnings per share 96.2 106.4 10.6
(cents)
Headline earnings per share 96.8 106.9 10.5
(cents)
Net asset value per share 328.5 322.1 (1.9)
(cents)
Tangible net asset value per 179.9 136.9 (23.95)
share (cents)
Weighted average number of 63 382 64 849 2.3
shares in issue (000`s)
Notes:
1 The amounts in the "Before the acquisition" column have been extracted
from the reviewed results of EOH for the year ended 31 July 2008.
2 The amounts in the "After the acquisition" column reflect the
financial effects of the acquisition on EOH.
3 The effects on basic earnings per share and headline earnings per
share are calculated based on the assumption that the acquisition was
effected on 1 August 2007.
4 The effects on net asset value per share and tangible net asset value
per share are calculated based on the assumption that the acquisition
was effected on 31 July 2008.
4. CLASSIFICATION OF THE ACQUISITION
The acquisition is classified as a Category 2 announcement in terms of the
Listings Requirements of the JSE.
19 December 2008
Sponsor
Merchantec (Proprietary) Limited
Auditors and reporting accountants
IAPA Johannesburg, Chartered Accountants (CA).
Date: 19/12/2008 15:00:22 Produced by the JSE SENS Department.
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