Velosi Takes Majority Stake in Two Companies

Velosi Limited has acquired a 65% interest in K2 Specialist Services Pte Ltd, for an aggregate consideration of SGD5.6 million (approximately £1.87 million). K2, incorporated in Singapore, provides a range of Inspection, Testing, Integrity Management and Engineering services to the Oil & Gas industry throughout Asia Pacific, Middle East and Central Asia.

Commenting on this acquisition, Dr. Nabil Abdul Jalil, CEO of Velosi said:

"In line with our strategy of increasing our market share in existing markets and expanding our service offering, the acquisition of K2 increases our profile, presence and market share in Asia Pacific, Middle East and Central Asia. K2 significantly adds to, and extends our reach for, our existing rope access services. Additionally, K2ís Rope Access Training School, one of the largest in the world, is an extremely valuable addition to the Groupís services".

Velosi also has acquired a 60% interest in Intec UK Limited, for a maximum aggregate consideration of £1.92 million. In addition, the vendors of Intec intend to subscribe for one million new ordinary shares in Velosi at 145p per share raising £1.45 million, the proceeds of which will be applied to general working capital purposes and / or acquisitions. Intec, incorporated in the United Kingdom in 1983, provides recruitment, training and consultancy services to a worldwide blue chip client base.

"This acquisition is a major addition to our service offering," said Dr. Nabil Abdul Jalil. "Intecís commitment to quality, safety, the environment and innovation has enabled it to build up an extensive network of contacts of over 65,000 candidates, which includes some of the most sought-after and highly skilled personnel available. In industries where there is a distinct shortage of high caliber individuals this is an invaluable asset to have acquired". John Hepworth, Managing Director of Intec said, "The synergy between the two companies was a major consideration for the acquisition and our confidence in Velosiís business model is demonstrated by our subscription for one million new ordinary shares in the Group. Through this acquisition, Velosi will be able to support the continued expansion of our Manpower business globally by integrating Intecís skills into the wider Group and allowing access to new markets through its existing global network".

K2 is focused on the upstream production and drilling sectors but also offers a defined range of services in the downstream sector. Additionally, K2 has benefited significantly from integrating Industrial Rope Access as part of its services to clients and now offers one of the largest Rope Access Training School in the world. One of K2's core principles is its commitment to HSE & Quality and is certified to ISO 9001 and accredited to several major classification and industry societies. For the year ended 31 December 2006, K2 generated audited revenues of SGD3.36 million (approximately £1.12 million) and pre-tax profit of SGD0.31 million (approximately £0.10 million). As at 31 December 2006, K2 had net assets of SGD0.53 million (approximately £0.18 million).

The consideration is to be satisfied by SGD2.80 million (approximately £0.94 million) in cash and the balance through the issue of new ordinary shares in Velosi (the "K2 Consideration Shares"). The K2 Consideration Shares will be issued in three tranches subject to the achievement of certain performance targets by K2 in the three financial years ending 31 December 2009. The tranches will comprise such a number of new ordinary shares in Velosi as equates to SGD0.7 million, SGD0.93 million and SGD1.17 million in value based on the weighted average closing share price of Velosi's shares in the three days prior to the audit for the respective financial period. In addition, there is a call and put option over the remaining 35% interest in K2 for an amount based on a multiple of five times the audited profit after tax and minority interests for the year preceding the exercise of the option. The vendors of K2 have guaranteed that they will achieve an aggregate profit after tax and minority interests of at least SGD4.00 million (approximately £1.34 million) over the three financial years ending December 31, 2009.

Intec supplies personnel from senior management and chartered engineers through to specialist skilled workers and commercial labour to the Aviation, Engineering and Construction, Commercial and Industrial, Power and Utilities, Oil and Gas, and Rail industries. Intec has an ISO 9001 Quality Management System in place, which is certified by a UKAS accredited certification body. Intec also provides unique and wide-ranging training programmes and a consultancy and training division that specialises in Quality, Safety and Environmental Management. Clients are wide ranging and include Preferred Supplier Status to some of the UKís major blue chip companies. For the financial year ended 30 April 2007, Intec generated audited revenues of £10.36 million and pre-tax profit of £0.1 million. As at 30 April 2007, Intec had audited net assets of £0.37 million.

The consideration is to be satisfied by an initial payment of £0.08 million in cash and £1.26 million to be satisfied through the issue of 868,966 new ordinary shares in Velosi at 145p per share. In addition, up to a further £0.58 million will be payable through the issue of new ordinary shares in Velosi on the achievement of certain profit targets by Intec over a three year period. Velosi will advance a £0.13 million loan to Intec for working capital purposes on completion of the acquisition. In addition, the vendors of Intec have guaranteed that Intec will achieve an aggregate profit after tax and minority interests of at least £1.05 million over three financial years commencing from the date of the acquisition. The Intec Consideration Shares will be held as collateral to ensure that the profit guarantee is met.

The vendors of Intec intend to subscribe for one million new ordinary shares in the capital of Velosi at 145p per share raising £1.45 million the proceeds of which will be applied for working capital purposes and / or acquisitions.

Application will be made for the Intec Consideration Shares to be admitted to trading on AIM with effect from 29 October 2007.

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