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JSC - Jasco - Acquisition by Jasco of Ferrotech
JASCO ELECTRONICS HOLDINGS LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1987/003293/06)
Share Code: JSC & ISIN: ZAE000003794
("Jasco" or "the company")
Acquisition by Jasco of Ferro ResONANT Technologies (Proprietary) Limited
("FerroTech")
1. Introduction
Shareholders are advised that Jasco has entered into an agreement to
acquire 100% of the ordinary shares in Ferro Resistant Technologies
(Proprietary) Limited ("FerroTech") effective 1 January 2012 ("the
Acquisition") from the founding shareholders and senior management,
represented by the Sirron Trust, the Ronsha Trust, Marco da Silva and CIV
Power (Proprietary) Limited (collectively the "Vendors"). The purchase
consideration, payable in cash, amounts to R13.0 million.
2. Nature of FerroTech businesses
FerroTech manufactures, supplies, designs, installs and maintains power
and energy solutions, with a specific focus on quality and security of
supply. Its offering includes voltage stabilisers, uninterrupted power
supplies (UPS), automatic voltage regulators, inverters, surge and
lightning protection and transformers.
3. Rationale for the Acquisition
The acquisition is in line with Jasco`s stated strategy of expanding the
group through acquisitions of companies that deliver specific solutions,
skills sets and expertise that complement its existing portfolio. The
FerroTech acquisition complements and broadens the offering of Jasco`s
Industry Solutions vertical, which currently comprises security, control
and monitoring, as well as building management solutions by now also
adding power optimisation (power assurance and quality solutions) to this
vertical. This will enable Jasco to deliver a more holistic offering and
be a single partner for clients` requirements.
FerroTech brings almost three decades of experience in the power field,
providing Jasco with not only quality products but also additional skills
in this sector.
In light of the generation capacity crisis in Southern Africa and the
resultant planned (and unplanned) power outages, it is crucial to ensure
companies are supplied with the appropriate level of clean power and
suitable alternative access to power. FerroTech delivers on this
requirement, offering the expertise to clients to deliver a stable,
clean, constant supply of power and lower ongoing energy costs, as well
as services such as assessments and recommendations.
Furthermore, the rapidly increasing availability of data bandwidth and
resultant usage of data through the usage of internet and cloud-based
computing (data & voice) services has also led to an increased number of
data centres. Due to their uptime requirements, data centres require a
redundant supply of power. This has led to a big demand for modular UPS
solutions, one of the key Ferrotech products.
The vertical cross-selling opportunities within Jasco, such as the supply
of UPS solutions, together with the additional sales channels to Jasco`s
existing client base will enable Jasco to grow this business. Management
believes the business has long term growth potential underpinned by
strong fundamentals given the factors mentioned above.
4. Salient features of the Acquisition
The purchase consideration will be settled through utilising existing
cash resources and is payable as follows:
* R7.85 million within ten business days after all suspensive
conditions have been met;
* R3.0 million on 31 March 2012
* R2.15 million on 30 June 2012
5. Conditions precedent
The following suspensive conditions must either be fulfilled or waived:
* That employment agreements be concluded and have become
unconditional within 10 (ten) business days after signature date;
and
* That the vendors furnish transfer documents with 5 (five) business
days after signature date.
6. Pro forma financial effects
The unaudited pro forma financial effects, for which the directors are
responsible, are provided for illustrative purposes only to show the
effect of the Acquisition on the earnings, headline earnings, diluted
earnings and diluted headline earnings per share as if the Acquisition
had taken effect on 1 July 2010 and on the net asset value and net
tangible asset value per share as if the Acquisition had taken effect on
30 June 2011. Because of their nature, the unaudited pro forma financial
effects may not give a fair presentation of Jasco`s financial position
and performance. The unaudited pro forma financial effects have been
compiled from the audited consolidated financial statements of Jasco for
the twelve months ended 30 June 2011 and are presented in a manner
consistent with the format and accounting policies adopted by Jasco and
have been adjusted as described in the notes below.
Before the After the Change Change
Acquisition Acquisition
(Actual)(1) (Pro forma)
(cents) (cents) (cents) (%)
Earnings per share 7.8 8.6 0.8 10.2
("EPS")(2)(3)(4)(6)
Headline Earnings per share 14.0 14.8 0.8 5.6
("HEPS") (2)(3) (4)(6)
Diluted EPS (2)(3)(4)(6) 7.8 8.6 0.8 10.2
Diluted HEPS (2)(3)(4)(6) 14.0 14.8 0.8 5.6
Net asset value per share 234.4 234.2 (0.2) (0.1)
("NAVPS") (3)(4)(5)(7)
Net tangible asset value per 156.3 153.4 (2.9) (1.9)
share ("NTAVPS")
(3)(4)(5)(7)
Shares in issue (`000) 146 399 336 146 399 336 - -
Weighted average number of 122 745 469 122 745 469 - -
shares in issue (`000)
Diluted weighted average 122 745 469 122 745 469 - -
number of shares in issue
(`000)
Notes
(1) The "Before Published" financial information has been extracted,
without adjustment, from Jasco`s published audited final results for
the year ended 30 June 2011.
(2) The adjustment to interest paid represents the ongoing interest
charge on the cash purchase consideration of R13,0 million. The
after tax effect of this adjustment calculated at 28% is R382 500.
(3) The adjustment incorporates the audited results of FerroTech for the
12 months ended 31 March 2011. The 12 month results of FerroTech
have been extracted from the audited annual financial statements of
FerroTech and Jasco confirms that it is satisfied with the quality
of such audited annual financial statements.
(4) The once-off transaction costs of R270 000 have been expensed as per
the revised IFRS 3 - Business Combinations. No tax deduction is
permitted.
(5) The adjustments reflect the increase in the bank overdraft with
R13,0 million relating to the purchase consideration and the related
effect of adjusting for at acquisition goodwill of R3,992 million.
(6) The Actual Before and Pro forma After EPS, HEPS, Diluted EPS and
Diluted HEPS has been calculated using the weighted average number
of shares in issue of 122 745 469.
(7) The Actual Before and Pro forma After NAVPS and NTAVPS has been
calculated using the actual number of shares in issue of 146 399
336.
7. Categorisation of the Acquisition
The Acquisition is categorised as a Category 2 transaction for purposes
of the Listings Requirements of the JSE as it constitutes circa 9% of
Jasco`s market capitalisation and therefore does not require shareholder
approval.
Johannesburg
23 January 2012
Sponsor:
Grindrod Bank Limited
Date: 23/01/2012 11:02:19 Supplied by www.sharenet.co.za
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