ESOR LIMITED - Acquisition of Tuboseal Services Pty Ltd and the Business Assets and Operations from Tuboseal Pty Ltd

Acquisition of Tuboseal Services Pty Ltd and the Business Assets and Operations from Tuboseal Pty Ltd

ESOR LIMITED
(Incorporated in the Republic of South Africa)
(Registration number: 1994/000732/06)
JSE code: ESR
ISIN: ZAE000184669
(“Esor”)

ACQUISITION OF TUBOSEAL SERVICES PROPRIETARY LIMITED (“TUBOSEAL SERVICES”) AND
THE   BUSINESS  ASSETS  AND  OPERATIONS   FROM  TUBOSEAL  PROPRIETARY  LIMITED
(“TUBOSEAL”)

1. INTRODUCTION

Esor hereby advises its shareholders that it has acquired through Esor
Construction (Pty) Ltd, a 100% held subsidiary, and in separate transactions, a
100% interest in Tuboseal Services from Mr Jean-Louis Frey for a consideration
of R15 million, and the business assets and operations of Tuboseal for a
consideration   of   R18.25    million,   (together   “Tuboseal   Group”)   (the
“Transactions”). The binding agreements were entered into on 6 October 2016 with
the effective date of the transaction being 1 September 2016. Esor will also be
responsible for settling the balance of R3 million owing on certain assets
acquired as part of the Transactions.

The consideration will be settled by means of a cash payment of R17,45 million
on 7 October 2016 and the balance on 31 October 2016.

As at 29 February 2016 (the “Last Reporting Date”), the value of net assets
acquired and net profit after tax were as follows:

                           Net Asset Value            Net Profit After Tax
Tuboseal Services          R13 435 160                R2 856 167
Tuboseal                   R6 119 167                 R5 707 508
Total                      R19 554 327                R8 563 675


2. NATURE OF THE BUSINESS OF TUBOSEAL GROUP

Established in 1987, Tuboseal Group has developed into the foremost pipeline
rehabilitation company in Cape Town, South Africa. As a frontrunner in the
pursuit of world class trenchless technologies in local municipalities and
industries, Tuboseal Group has played an instrumental part in ensuring
credibility, acceptance and success of trenchless rehabilitation methods in
South Africa.

The rehabilitation methods offered are all geared towards minimising disruption
to the immediate environment, traffic, the public and commercial activities.


3. RATIONALE FOR THE TRANSACTION

The Transaction:

-   expands Esor’s existing product offering and provides vertical integration
    in the maintenance of infrastructure;
-   offers attractive margins that can only be achieved in niche businesses;
-   provides a platform for Esor to grow its geographic footprint with a
    presence in the Western Cape; and
-   provides an opportunity to participate in the expected growth of
    infrastructure maintenance contracts and expansion of the products across
    Southern Africa.

4. CONDITIONS PRECEDENT TO THE TRANSACTIONS
All conditions precedent to the Transactions have been fulfilled.

5. CATEGORISATION OF THE TRANSACTION

The Transactions have been categorised as a Category 2 acquisition in terms of
the Listings Requirements of the JSE. It is therefore not subject to the
approval of Esor’s shareholders and accordingly no circular to Esor shareholders
is required. None of the parties are related to Esor.

6. MEMORANDUM OF INCORPORATION

Esor undertakes that the memorandum of incorporation of Tuboseal Services will
conform to Schedule 10 of the JSE Listings Requirements, as required.

Germiston
10 October 2016

Sponsor
Vunani Corporate Finance

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