STOCK EXCHANGE RELEASE 1 December 2008 at 2:15 p.m.
SAVCOR GROUP LTD OY SUPPLEMENTS ITS STOCK EXCHANGE RELEASE DATED 28 NOVEMBER
2008 REGARDING VOLUNTARY TENDER OFFER CONSIDERED BY IT ON CENCORP PLC AND
RELATED PROPOSAL ON TRANSACTION FOR CENCORP PLC
Savcor Group Ltd Oy (”Savcor”) supplements by this stock exchange release the
stock exchange release published by it on 28 November 2008 with regard to
Conditional Financing Arrangement, Transaction and Tender Offer considering
Cencorp plc (together “Combined Transaction”), which are defined in more detail
in the Savcor's stock exchange release dated 28 November 2008, and the
completions of which are conditional for each others.
1. FINANCIAL FIGURES OF THE COMPANIES INVOLVED IN THE TRANSACTION
Pursuant to the stock exchange release published on 28 November 2008 by Savcor,
as part of the Transaction Cencorp would acquire all shares in Savcor Alfa Ltd,
a company indirectly owned by Savcor, provided that Savcor Alfa would, prior
thereto, have purchased the businesses of Photonium Ltd and Akseli Lahtinen Ltd
through separate business purchase transactions.
The financial figures presented below on the companies involved in the
Transaction are based on the Bookkeeping Act and potential implications arising
out of the change into reporting in accordance with IFRS have not been taken
into account.
Savcor Alfa Ltd
The figures below are based on the confirmed financial statements of Savcor Alfa
Ltd (”Savcor Alfa”) from the financial period of 1 January 2007 - 31 December
2007 and unconfirmed interim accounts from the period from 1 January to 30 June
2008:
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| Turnover and profitability | | | |
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| EUR 1 000 | 1 January | 1 January | |
| | 2007 -31 | 2008 - 30 | |
| | December | June 2008 | |
| | 2007 | | |
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| Turnover | 2 004 | 823 | |
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| EBITDA | 220 | -96 | |
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| Profit | 146 | -136 | |
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| Balance sheet | | | |
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| Assets | 31 December | 30 June 2008 | |
| | 2007 | | |
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| Non-current assets | 541 | 799 | |
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| R&D costs | 0 | 170 | |
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| Other intangible rights | 6 | 3 | |
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| Tangible assets | 535 | 625 | |
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| Current assets | 800 | 839 | |
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| Inventory | 83 | 178 | |
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| Accounts receivables | 294 | 340 | |
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| Other short-term receivables | 303 | 316 | |
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| Liquid assets | 119 | 5 | |
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| Total | 1 341 | 1 638 | |
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| Equity and liabilities | | | |
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| Equity | 480 | 321 | |
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| Untaxed reserves | 1 | 0 | |
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| Long-term debt | 546 | 865 | |
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| Short-term debt | 314 | 451 | |
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| Accounts payable | 250 | 361 | |
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| Other debts | 9 | 17 | |
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| Accrued expenses | 54 | 74 | |
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| Total | 1 341 | 1 638 | |
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The following should be noted while assessing the figures mentioned above:
Capitalized R&D costs are based on expected revenues from the specific
development projects. Tangible assets consist mostly of machinery and equipment
and advance payments. Inventory consists of materials and supplies and finished
products. 91 thousand euro of the accounts receivables as per 30 June 2008 are
intra-group receivables. Other short-term receivables include mostly POC
(percentage of completion) -receivables. As per 30 June 2008, 300 thousand euro
of long-term debts were loans from the financial institutions and rest were
debts to the group companies. Accounts payable as per 30 June 2008 include
intra-group loans of 95 thousand euro. The accrued expenses consist mostly of
accrued personnel costs.
In 2007 and during the first half of the year 2008 Savcor Alfa did not have
business transactions with Cencorp, Photonium Ltd or Akseli Lahtinen Ltd.
Savcor estimates the turnover of Savcor Alfa from the year 2008 to be somewhat
less than in 2007 or at most at the same level as in 2007. The EBITDA and profit
of H2/2008 are expected to be on the same level as in the first half of the year
2008. The investments made during the year 2008 to marketing, product
development and increase of manufacturing capacity as well as building on the
international maintenance network of the company burden the profitability of the
year 2008.
Photonium Ltd
The figures below are based on the confirmed financial statements of Photonium
Ltd (”Photonium”) from the financial period of 1 January 2007 - 31 December 2007
and unconfirmed interim accounts from the period from 1 January to 30 June 2008.
In addition, the balance sheet items which will in connection with the business
purchase transaction of Photonium be transferred to Savcor Alfa appear in the
below table and are discussed in more detail in Section 2 below:
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| Turnover and profitability | | | |
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| EUR 1 000 | 1 January | 1 January | |
| | 2007 -31 | 2008 - 30 | |
| | December | June 2008 | |
| | 2007 | | |
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| Turnover | 5 019 | 1 243 | |
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| EBITDA | 748 | -84 | |
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| Profit | 274 | -371 | |
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| Balance sheet | | | |
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| Assets | 31 December | 30 June 2008 | Items |
| | 2007 | | transferring in |
| | | | the business |
| | | | purchase |
| | | | transaction* |
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| Non-current assets | 1 858 | 1 718 | |
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| R&D cost | 1 161 | 1 066 | x |
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| Other intangible rights | 247 | 215 | x |
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| Goodwill | 136 | 126 | |
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| Tangible assets | 314 | 275 | x |
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| Subsidiary shares | 0 | 36 | |
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| Current assets | 4 388 | 4 487 | |
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| Inventory | 1 626 | 1 729 | x |
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| Accounts receivables | 2 337 | 2 138 | |
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| Other short-term receivables | 420 | 570 | |
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| Liquid assets | 4 | 50 | x |
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| Total | 6 246 | 6 205 | |
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| Equity and liabilities | | | |
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| Equity | 1 550 | 1 307 | |
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| Provisions | 60 | 70 | |
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| Long-term debts | 1 265 | 1 265 | 800 |
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| Subordinated loan | 400 | 400 | |
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| Other debts | 865 | 865 | |
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| Short-term debts | 3 371 | 3 563 | |
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| Loans from financial | 768 | 794 | |
| institutions | | | |
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| Received advance payments | 206 | 226 | |
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| Accounts payable | 1 228 | 1 137 | |
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| Other debts | 521 | 648 | |
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| Accrued expenses | 648 | 758 | |
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| Total | 6 246 | 6 205 | |
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| Balance sheet items of the assets marked with *) will transfer in the |
| business purchase transaction in accordance with the values as per the |
| closing of the business purchase transaction. In addition, 800 thousand euro |
| of interest-bearing debt will transfer in the business purchase transaction. |
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The following should be noted while assessing the figures mentioned above:
Capitalized R&D costs are based on expected revenues from the specific
development projects. Company's ability to finance its operations affects
materially on realizing the expected revenues. Without sufficient financing the
R&D costs are subject to significant write-downs.
Intangible rights consist of license fees and patents. Tangible assets consist
mainly of equipment and machinery and production machinery and equipment.
Inventory consists mainly of materials and supplies and on-going projects.
Current assets include significant slowly rotating items subject to write-downs.
Photonium will acquire a packing line from its subsidiary company prior to the
business purchase transaction. This packing line will be a part of the
transferring inventory and will be valued at approximately 300 thousand euro.
Photonium has acted as a subcontractor for Cencorp. In 2007 Photonium's sales to
Cencorp were approximately 1.15 million euro. Cencorp has also acted as a
subcontractor for Photonium. In 2007 Cencorp's sales to Photonium were
approximately 445 thousand euro. In addition, Akseli Lahtinen Ltd has acted as a
subcontractor to Photonium. During the first half of the year 2008 the sales
between Akseli Lahtinen Ltd and Photonium were approximately 80 thousand euro.
Akseli Lahtinen Ltd
The figures below are based on the confirmed financial statements of Akseli
Lahtinen Ltd (”Akseli Lahtinen”) from the financial period of 1 March 2007 - 29
February 2008 and unconfirmed interim accounts from the period from 1 March to
30 June 2008. In addition, the balance sheet items which will in connection with
the business purchase transaction of Akseli Lahtinen be transferred to Savcor
Alfa appear in the below table and are discussed in more detail in Section 2
below:
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| Turnover and profitability | | | |
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| EUR 1 000 | 1 March | 1 March 2008 | |
| | 2007 - 29 | - 30 June | |
| | February | 2008 | |
| | 2008 | | |
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| Turnover | 1 110 | 419 | |
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| EBITDA | 209 | 85 | |
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| Profit | 81 | 57 | |
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| Balance sheet | | | |
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| Assets | 29 February | 30 June 2008 | Items |
| | 2008 | | transferring in |
| | | | the business |
| | | | purchase |
| | | | transaction* |
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| Non-current assets | 541 | 653 | |
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| R&D cost | 412 | 530 | x |
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| Other intangible rights | 6 | 5 | x |
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| Tangible assets | 123 | 118 | x |
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| Current assets | 630 | 643 | |
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| Inventory | 358 | 320 | x |
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| Accounts receivables | 250 | 109 | |
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| Other short-term receivables | 17 | 198 | |
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| Liquid assets | 5 | 16 | x |
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| Total | 1 171 | 1 296 | |
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| Equity and liabilities | | | |
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| Equity | -105 | -66 | |
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| Long-term debts | 939 | 1 032 | 386 |
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| Subordinated Loan | 170 | 200 | |
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| Other loans | 769 | 832 | |
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| Short-term debts | 337 | 329 | |
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| Received advance payments | 81 | 13 | |
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| Accounts payable | 158 | 197 | |
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| Other debts | 28 | 50 | |
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| Accrued expenses | 70 | 69 | |
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| Total | 1 171 | 1 296 | |
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| Balance sheet items of the assets marked with *) will transfer in the |
| business purchase transaction in accordance with the values as per the |
| closing of the business purchase transaction. In addition, 386 thousand euro |
| of interest-bearing debt will transfer in the business purchase transaction. |
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The following should be noted while assessing the figures mentioned above:
Capitalized R&D costs are based on expected revenues of the specific development
projects. Company's ability to finance its operations affects materially on
realizing the expected revenues. Without sufficient financing the R&D costs are
subject to significant write-downs.
Tangible assets consist mainly on production machinery and equipment.
Inventory consists mainly of materials and supplies and unfinished products.
Current assets include significant amount of unfinished products subject to
write-downs.
Akseli Lahtinen has acted as a subcontractor for Photonium. During the first
half of the year 2008 the sales between Akseli Lahtinen and Photonium were
approximately 80 thousand euro.
Forecast on Photonium Ltd's and Akseli Lahtinen Ltd's year 2008
Savcor forecasts Photonium's turnover in the second half of the year 2008 to be
below the turnover for H1/2008. The EBITDA and profit for the whole year of 2008
will be below the level of the previous year and they are expected to be clearly
negative. Decline from the level of the year 2007 arises mainly from the weak
financing situation of the company as a result of which a part of the deliveries
expected to take place at the end of the year 2008 will transfer to the
beginning of the year 2009. As part of the business purchase transaction the
business of Photonium will be transferred to Savcor Alfa and the financing
situation of the business of Photonium will be improved significantly improving
its operating possibilities in the year 2009.
The turnover level of Akseli Lahtinen on the period between March and December
2008 is forecasted to be almost at the level of the financial period of 1 March
2007 and 29 February 2008. The EBITDA and profit of the period between March and
December 2008 are expected to be positive, however they are forecasted to be
somewhat smaller than in the financial period between 1 March 2007 and 29
February 2008.
In assessing the profitability of the businesses to be transferred from
Photonium and Akseli Lahtinen
it should be noted that a substantial amount of R&D costs have been activated in
the companies' balance sheets.
Savcor's forecasts are based on its current level of knowledge and can thus
deviate significantly from the actual.
2. ASSETS AND DEBTS TO BE TRANSFERRED TO CENCORP IN CONNECTION WITH THE
TRANSACTION
In accordance with Savcor's stock exchange release published on 28 November
2008, as a part of the Transaction Cencorp would acquire all shares in Savcor
Alfa, a company indirectly owned by Savcor (”Share Purchase”) provided that
Savcor Alfa would prior thereto have been purchased the businesses of Photonium
and Akseli Lahtinen through separare business purchase transactions (”Business
Purchases of Photonium and Akseli Lahtinen”).
Savcor estimates that the assets and debts specified in the interim accounts as
per 30 June 2008 listed above in table 1, supplemented with the following
information, properly describe the assets and debts transferring to Cencorp
group in connection with the Share Purchase: (i) Savcor Alfa has continuted its
normal business after 30 June 2008 and will continue it until the completion of
the Share Purchase; and (ii) Savcor Alfa finances and completes the Business
Purchases of Photonium and Akseli Lahtinen in accordance with the stock exchange
release dated 28 November 2008 which will increase the assets and debts to be
transferred to Cencorp group in connection with the Share Purchase.
Savcor Alfa finances the Business Purchases of Photonium and Akseli Lahtinen by
a 2.1 million euro loan from Savcor Face Group Ltd, which is a subsidiary of
Savcor. The respective debt of Savcor Alfa will transfer in connection with the
Share Purchase to Cencorp group.
Certain assets and debts of Photonium and Akseli Lahtinen will transfer at their
market value to Savcor Alfa in connection with Savcor Alfa closing the Business
Purchases of Photonium and Akseli Lahtinen. Transferring assets are marked with
“X” in the tables relating to Photonium and Akseli Lahtinen presented in Section
1 and the transferring debts are specified in euros.
The assets which will transfer to Savcor Alfa include the material assets for
the continuation of the businesses of Photonium and Akseli Lahtinen. The assets
will be valued based on the IFRS 3 Business Combinations standard. The acquired
identifiable assets and liabilities assumed are recognised as of the acquisition
date and measured at fair value as at that date. The net difference between the
acquisition cost and the acquired identifiable assets and liabilities assumed is
recognised as goodwill.
In accordance with Savcor's current estimate, along with the Business Purchases
of Photonium and Akseli Lahtinen approximately a total of 1.186 million euro (i)
Tekes-loans of Photonium and Akseli Lahtinen; and (ii) Akseli Lahtinen's loan
from Sampo Bank will be transferred to Savcor Alfa. The amount of the
transferring Tekes-loans may increase should more such loans would be withdrawn
prior to completion of the business purchase transactions. The amounts and time
schedule for repayments of the transferring Tekes-loans and the loan from Sampo
Bank are as follows:
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| Creditor | Amount of loan | Repayment |
| | (EUR 1 000€) | |
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| Sampo Bank plc | 46,70 | In equal instalments in 2009 |
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| Tekes | 339,61 | In equal instalments in 2010 - |
| | | 2014 |
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| Tekes | 25,62 | In equal instalments in 2009 - |
| | | 2011 |
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| Tekes | 658,00 | In equal instalments in 2009 - |
| | | 2012 |
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| Tekes | 116,00 | In equal instalments in 2012 - |
| | | 2015 |
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The above loans transferring in connection with the business purchases to Savcor
Alfa will be transferred with the company in connection with the Share Purchase
to Cencorp group.
As mentioned in the stock exchange release of Sacvor dated 28 November 2008, the
financing position of Photonium and Akseli Lahtinen is very tight and they have
a large number of unpaid overdue debts. However, for the avoidance of doubt it
is hereby clarified that no other debts than the Tekes-loans and the loan from
Sampo Bank which have been mentioned above will transfer to Savcor Alfa.
3. EFFECT OF THE COMBINED TRANSACTION ON CENCORP'S EQUITY RATIO
In particular the following factors affect the equity ratio of the Cencorp group
following the Combined Transaction: (i) the execution of the Conditional
Financing Arrangement (the effects of which have been assessed in Cencorp's
stock exchange release published on 28.11.2008); (ii) the financing and
execution of the Business Purchases of Photonium and Akseli Lahtinen by Savcor
Alfa (the effects of which have been assessed above in Section 2); (iii) the
purchase price paid by Cecorp for Savcor Alfa, the amount of assets and debts to
be transferred and the nature of the contribution to be paid (see Savcor's stock
exchange release published on 28.11.2008); (iv) the potential write-downs to be
made with respect to certain balance sheet items in connection with the Combined
Transaction; and (v) reporting of the Combined Transaction in accordance with
IFRS.
As per the initial assessment of Savcor, the equity ratio of Cencorp group after
the Combined Transaction shall be 30-50% assuming the balance sheet position of
Cencorp as per 30.9.2008, the balance sheet positions of other companies to be
combined therewith as per 30.6.2008 and the pre-emptive rights issue of 3,1
million euro. The final equity ratio may, however, deviate from this initial
assessment.
4. DESCRIPTION OF THE BUSINESSES TO BE TRANSFERRED IN CONNECTION WITH THE
TRANSACTION AND SAVCOR'S ASSESSMENT ON THE SYNERGIES AND OTHER BENEFITS TO
CENCORP RESULTING FROM THE COMBINED TRANSACTION
Savcor Alfa Ltd is an industrial laser equipment integrator supplying work
stations and work cells based on laser technology for laser marking, laser
cutting, laser welding and laser micromachining applications. The company has
strong knowhow in laser equipment and laser processing processes and the
application of the same to various industry needs. The laser work stations
developed by Savcor Alfa are used in telecommunications, electronics,
pharmaceutical, metal and automobile industries.
Photonium Ltd designs and manufactures automation solutions for electronics
industry and equipment for the production of
optical fibers. Automation solutions developed by Photonium for small parts
assembly and packaging are based on standard modular cells. The percentage of
customer specific applications in the automation solutions supplied by Photonium
is typically under 15%. The company has over 20 years of experience in
developing and manufacturing automation solutions utilizing innovative new
technologies. The solutions developed by Photonium minimize the space
requirements and maximize the capacity in a cost-effective manner. The most
important customer segments of the automation solutions developed by the company
are telecommunications and electronics industry.
Akseli Lahtinen Ltd is an automation engineering company specialised in
designing and producing manufacturing automation solutions for metal industry.
The current product portfolio consists, among others, of punching, bending and
forming equipment and selected customer specific automation equipment for metal
industry. The company's 20 years of experience in automation shall be utilized
in the future in the development and manufacturing of new product platforms.
The purpose of Savcor is to make Cencorp through the Combined Transaction an
even more significant company specialised in automation solutions for the
electronics industry and capable of offering more versatile and more effective
automation and laser solutions.
In accordance with Savcor's assessment, the contemplated consolidation of the
businesses of the four companies by way of the Combined Transaction is likely to
result in significant synergies in revenues, costs and financing and other
benefits resulting in particular from the following strengths of the respective
companies complementing each other: (i) Savcor Alfa's laser knowhow meets
Cencorp's needs to partner in the field of laser technology, (ii) the versatile
automation experience of Photonium and Akseli Lahtinen enables the combination
of the products of Cencorp and Savcor Alfa in a more flexible way into different
and new solutions as well as development and manufacturing of new solutions,
(iii) the combined product portfolio of Savcor Alfa, Photonium and Cencorp
covers a significant part of the process chain of electronics industry thus
enabling the sale of larger combined solutions, (iv) Cencorp's brand recognition
and position as an accepted supplier in wide customer base and global
distribution and maintenance network further the product sales, (v) the
engineering capabilities of Akseli Lahtinen enable the better availability of
critical components, (vi) the functions and work processes of the companies can
be developed and rationalized, (vii) the strengthening of Cencorp's balance
sheet and the improvements in its cash position enable the company to maintain
its significant customer relationships and develop new ones, (viii) decreases in
the costs for debt financing, and (ix) changes in Cencorp's Board of Directors
and management increase their industry and customer knowledge and experience in
international management.
The assessments presented in this Section 4 on the synergies and other benefits
of the Combined Transaction are Savcor's own initial assessments.
From the point of view of Cencorp's shareholders, the Combined Transaction would
enable them to either sell their shares in the Tender Offer for a price of 0,08
euro per share or to remain as a shareholder of the company. In the latter
alternative the shareholders could subscribe for new shares in the pre-emptive
rights issue for the same price of 0,08 euro per share or sell their
subscription rights in the market.
Savcor Group Ltd Oy
Additional information:
Hannu Savisalo
Managing Director
Savcor Group Ltd Oy
Telephone:
+358 50 2688
+61 417 268070
Email: hannu.savisalo@savcor.com
The SAVCOR GROUP is a global technology and industrial services corporation
serving customers in the areas such as rehabilitation of industrial and civil
assets, telecom and electronic industries as well as forest related industries.
Savcor has its chief operations in Australia, China and Europe. Savcor employs
more than 1700 people in 13 countries. Its subsidiary, Savcor Group Ltd is
listed at the Australian Securities Exchange, ASX since 2007.
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SAVCOR GROUP LTD OY SUPPLEMENTS ITS STOCK EXCHANGE RELEASE DATED 28 NOVEMBER
| Source: Nasdaq Helsinki Oy