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PMV - Primeserv Group Limited - Compensation for contracts from HRS and
withdrawal of cautionary announcement
PRIMESERV GROUP LIMITED
("Primeserv")
Incorporated in the Republic of South Africa
Registration number: 1997/013448/06
Share code: PMV
ISIN: ZAE000039277
www.primeserv.co.za
e-mail: productivity@primeserv.co.za
COMPENSATION FOR CONTRACTS FROM HRS AND WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT
1. INTRODUCTION
Further to the cautionary announcement dated 2 March 2011,
Primeserv shareholders are advised that Primeserv Staff
Dynamix (Proprietary) Limited, a subsidiary of Primeserv, has
entered into an agreement requiring the payment of
compensation arising out of the termination of service
agreements for the provision of temporary employment services
with customers of the vendors and the conclusion of such
contracts with Primeserv ("the transaction"). The vendors, who
conduct a business known as "HRS", are Zambli 224
(Proprietary) Limited and Yamani Trading 1009 (Proprietary)
Limited. The maximum total cash consideration payable to the
vendors is an amount of R5 500 000. The consideration payable
is based upon future sales to customers in terms of the
contracts referred to above.
2. RATIONALE FOR THE TRANSACTION
The contracts entered into will serve to significantly expand
the business activities of Primeserv within the Eastern Cape,
in particular in regard to the business of the Outsourcing
Division of Primeserv and will also present an opportunity
for national expansion in regard to certain contracts.
3. CONSIDERATION AND FUNDING
The consideration is payable monthly upon receipt of payment
from customers. The consideration will be funded from cash
flows generated by the new business and Primeserv`s internal
resources.
4. CONDITIONS
There are no outstanding conditions in relation to the
transaction. The transaction is classified as a Category 2
transaction in terms of the JSE Listings Requirements and
does not need shareholder approval.
5. WARRANTIES, TERMS AND CONDITIONS
The transaction is subject to warranties by the vendors in
regard to liabilities for services supplied by the vendors
prior to the date of commencement of supply by Primeserv. The
principal of the vendors has entered into a restraint
undertaking in terms whereof she is restrained from
competition with Primeserv for a period of five years.
6. EFFECTIVE DATE
The effective date of the transaction is 1 May 2011.
7. UNAUDITED PRO FORMA FINANCIAL EFFECTS OF THE TRANSACTION
The unaudited pro forma financial effects, as set out below,
have been prepared for illustrative purposes only, to assist
shareholders in assessing the impact of the transaction on
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 tangible net asset value per share
("TNAVPS").
The pro forma financial effects have been applied to
Primeserv`s Reviewed Consolidated Condensed Statement of
Comprehensive Income for the 12 months ended 31 December 2010
and the Consolidated Condensed Statement of Financial
Position as at31 December 2010 on a basis consistent with the
accounting policies of Primeserv.
These unaudited pro forma financial effects are disclosed in
terms of the Listings Requirements of the JSE Limited and,
due to their nature, may not fairly present Primeserv`s
financial position, changes in equity, result of operations
or cash flows. The unaudited pro forma financial effects are
the responsibility of the directors of Primeserv.
UNAUDITED PRO FORMA FINANCIAL EFFECTS
Before After %
transaction transaction change
EPS (cents) 7,02 7,64 8,8
HEPS (cents) 7,02 7,64 8,8
DEPS (cents) 7,02 7,64 8,8
DHEPS (cents) 7,02 7,64 8,8
NAVPS (cents) 77 77 0,0
TNAVPS (cents) 61 59 (3,3)
Weighted average number
of shares in issue (`000) 102 881 102 881
Shares in issue at
period-end (`000) 99 395 99 395
Notes
1. The EPS, the HEPS, the DEPS and the DHEPS as disclosed
in the "Before" column of the table, are based on
Primeserv`s reviewed interim financial results for the
12 months ended 31 December 2010.
2. The EPS, the HEPS, the DEPS and the DHEPS effects, as
disclosed in the "After" column of the table, have been
prepared on the basis of the following assumptions and
information:
a. Sales to customers in terms of the contracts for
the period 1 January 2010 to 31 December 2010 and
historical costs incurred by HRS in regard to these
contracts over the same period, extracted from the
management accounts of HRS for the same period. The
Primeserv directors are satisfied with the quality
of the management accounts;
b. The financial effects of the amortisation of
intangibles, based upon the purchase price payable
had the compensation been paid based upon historic
sales and profitability for the 12-month period
ended 31 December 2010.
3. The NAVPS and TNAVPS, as disclosed in the "Before"
column of the table, are based on Primeserv`s reviewed
interim financial results for the 12 months ended 31
December 2010.
4. The NAVPS and TNAVPS, as set out in the "After" column,
are based on the amount of compensation due had the
compensation been payable based upon historic sales and
profitability for the 12-month period ended 31 December
2010.
5. There are no material costs associated with the
transaction.
8. WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT
Shareholders are advised that the cautionary announcement
dated 2 March 2011 is withdrawn and that they no longer need
to exercise caution when dealing in their Primeserv
securities.
Bryanston
28 March 2011
Sponsor
Deloitte & Touche Sponsor Services (Pty) Limited
(Incorporated in the Republic of South Africa)
(Registration number 1996/000034/07)
Date: 28/03/2011 17:02:01 Supplied by www.sharenet.co.za
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