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COMMUNIQUE DE PRESSE
Amaro (UD), le 15 novembre 2007.
Le document d'information requis par la Consob (d'après l'article 71 du Règlement approuvé selon la résolution n° 11971 du 14 mai 1999 telle qu'amendée et intégrée) suite à l'acquisition de 65 % du capital d'Advanet Inc. a été déposé auprès de la Consob aujourd'hui.
La rédaction en anglais de ce prospectus n'étant pas requise, le Conseil d'Administration a décidé de présenter seulement l'information principale dans ce document.
ASSETS OF GROUP ACQUIRED
Advanet is a leading firm in Japan in the design, development and production of embedded systems (miniaturized computers) and also operates in the semiconductors industry and in other industries including transportation and medical.
FINANCIAL AND ECONOMIC DATA ON THE EQUITY INTEREST ACQUIRED
Advanet Group's aggregated financial statements[1] (which include the individual financial statements of Advanet Inc. and of its subsidiaries Vantec Inc., Advanet R&D and the firms Spirit 21 and Moving Eye Inc, acquired by Advanet Group from related parties after 30 April 2007) as at Advanet's balance sheet date (30 April 2007), presented in Japanese yen and prepared in accordance with local accounting standards, are as follows:
+---------------------------------------------+------+-----------+---------------+----------+-------+
| | | Japanese | GAAPs | | |
+---------------------------------------------+------+-----------+---------------+----------+-------+
| | | | Y'000 | | E'000 |
+---------------------------------------------+------+-----------+---------------+----------+-------+
| | | Total |Non-core items | Net | Net |
+---------------------------------------------+------+-----------+---------------+----------+-------+
| |Notes |04/30/2007 | | | |
+---------------------------------------------+------+-----------+---------------+----------+-------+
|ASSETS | | | | | |
+---------------------------------------------+------+-----------+---------------+----------+-------+
|Intangile assets | | 27,679 | | 27,679 | 166 |
+---------------------------------------------+------+-----------+---------------+----------+-------+
|Property, Plant and equipment | A | 423,846 | 212,624 | 211,222 | 1,269 |
+---------------------------------------------+------+-----------+---------------+----------+-------+
|Investments in associate and other companies | | 1,75 | | 1,75 | 11 |
+---------------------------------------------+------+-----------+---------------+----------+-------+
|Other non current assets | B | 160,586 | 160,586 | - | - |
+---------------------------------------------+------+-----------+---------------+----------+-------+
|Total non-current assets | | 613,861 | 373,21 | 240,651 | 1,445 |
+---------------------------------------------+------+-----------+---------------+----------+-------+
|Inventory | | 1,198,420 | |1,198,420 | 7,198 |
+---------------------------------------------+------+-----------+---------------+----------+-------+
|Trade receivables | | 1,018,592 | |1,018,592 | 6,118 |
+---------------------------------------------+------+-----------+---------------+----------+-------+
|Other current assets | C | 2,679,528 | 2,434,016 | 245,512 | 1,475 |
+---------------------------------------------+------+-----------+---------------+----------+-------+
|Cash and cash equivalent | E | 3,392,323 | (3,075,566) |6,467,889 |38,849 |
+---------------------------------------------+------+-----------+---------------+----------+-------+
|Totale current assets | | 8,288,863 | -641,55 |8,930,413 |53,639 |
+---------------------------------------------+------+-----------+---------------+----------+-------+
|Total assets | | 8,902,724 | -268,34 |9,171,064 |55,085 |
+---------------------------------------------+------+-----------+---------------+----------+-------+
| | | | | | |
+---------------------------------------------+------+-----------+---------------+----------+-------+
|LIABILITIES AND EQUITY | | | | | |
+---------------------------------------------+------+-----------+---------------+----------+-------+
|Share capital | | 92,44 | | 92,44 | 555 |
+---------------------------------------------+------+-----------+---------------+----------+-------+
|Reserves | | 886,402 | | 886,402 | 5,324 |
+---------------------------------------------+------+-----------+---------------+----------+-------+
|Net profit (loss) for the period | D | 579,454 | -268,34 | 847,794 | 5,092 |
+---------------------------------------------+------+-----------+---------------+----------+-------+
|Group shareholders' equity | | 1,558,296 | -268,34 |1,826,636 |10,971 |
+---------------------------------------------+------+-----------+---------------+----------+-------+
|Minory capital and reserves | | 349,264 | | 349,264 | 2,098 |
+---------------------------------------------+------+-----------+---------------+----------+-------+
|Minorty profit (loss) for the period | | 172,135 | | 172,135 | 1,034 |
+---------------------------------------------+------+-----------+---------------+----------+-------+
|Equity attributable to minority interest | | 521,399 | 0 | 521,399 | 3,132 |
+---------------------------------------------+------+-----------+---------------+----------+-------+
|Total shareholders' equity | | 2,079,695 | -268,34 |2,348,035 |14,103 |
+---------------------------------------------+------+-----------+---------------+----------+-------+
|Medium-/long-term borrowing | | 3,382,222 | |3,382,222 |20,315 |
+---------------------------------------------+------+-----------+---------------+----------+-------+
|Bonded loan | | 2,122,500 | |2,122,500 |12,749 |
+---------------------------------------------+------+-----------+---------------+----------+-------+
|Employee benefit obligations | | 104,661 | | 104,661 | 629 |
+---------------------------------------------+------+-----------+---------------+----------+-------+
|Total non-current liabilities | | 5,609,383 | 0 |5,609,383 |33,692 |
+---------------------------------------------+------+-----------+---------------+----------+-------+
|Trade payables | | 923,351 | | 923,351 | 5,546 |
+---------------------------------------------+------+-----------+---------------+----------+-------+
|Short-term borrowings | | 80 | | 80 | 481 |
+---------------------------------------------+------+-----------+---------------+----------+-------+
|Tax payables | | 38,211 | | 38,211 | 230 |
+---------------------------------------------+------+-----------+---------------+----------+-------+
|Other current liabilities | | 172,084 | | 172,084 | 1,034 |
+---------------------------------------------+------+-----------+---------------+----------+-------+
|Total current liabilities | | 1,213,646 | 0 |1,213,646 | 7,29 |
+---------------------------------------------+------+-----------+---------------+----------+-------+
|Total liabilities | | 6,823,029 | 0 |6,823,029 |40,982 |
+---------------------------------------------+------+-----------+---------------+----------+-------+
|Total liabilities and equity | | 8,902,724 | -268,34 |9,171,064 |55,085 |
+---------------------------------------------+------+-----------+---------------+----------+-------+
[1] The aggregated financial statements report the financial position of a group of companies which are not bound by any legal equity interest relationship. The aggregated financial statements are prepared using the same techniques adopted for the consolidated financial statements and consequently involve the cancellation of all transactions effected between aggregated companies, including internal profits and particularly those concerning inventories and fixed assets.
+------------------------------------------+------+------------+---------------+------------+---------+
| | | Japanese | GAAPs | | |
+------------------------------------------+------+------------+---------------+------------+---------+
| | | | ¥'000 | | E'000 |
+------------------------------------------+------+------------+---------------+------------+---------+
| | | Total |Non-core items | Net | Net |
+------------------------------------------+------+------------+---------------+------------+---------+
| | | | results | | |
+------------------------------------------+------+------------+---------------+------------+---------+
| |Notes | Financial | year as at | 04/30/2007 | |
+------------------------------------------+------+------------+---------------+------------+---------+
|Revenues from sales of products and | | | | | |
+------------------------------------------+------+------------+---------------+------------+---------+
|services | | 5,486,356 | | 5,486,356 | 32,953 |
+------------------------------------------+------+------------+---------------+------------+---------+
|Other revenues | F | 295,280 | 89,929 | 205,351 | 1,233 |
+------------------------------------------+------+------------+---------------+------------+---------+
| | | | | | |
+------------------------------------------+------+------------+---------------+------------+---------+
| | | | | | |
+------------------------------------------+------+------------+---------------+------------+---------+
|Cost of materials | |(2,222,171) | |(2,222,171) |(13,347) |
+------------------------------------------+------+------------+---------------+------------+---------+
|Service costs | | (139,208) | | (139,208) | (836) |
+------------------------------------------+------+------------+---------------+------------+---------+
|Lease & hire costs | | (433,929) | | (433,929) | (2,606) |
+------------------------------------------+------+------------+---------------+------------+---------+
|Payroll costs | | (832,209) | | (832,209) | (4,999) |
+------------------------------------------+------+------------+---------------+------------+---------+
|Other provisions and other costs | G | (895,718) | (412,687) | (483,031) | (2,901) |
+------------------------------------------+------+------------+---------------+------------+---------+
|Depreciation & amortisation | H | (248,493) | (117,143) | (131,350) | (789) |
+------------------------------------------+------+------------+---------------+------------+---------+
|Operating profit | | 1,009,908 | (439,901) | 1,449,809 | 8,708 |
+------------------------------------------+------+------------+---------------+------------+---------+
|Finance expense | | (90,393) | | (90,393) | (543) |
+------------------------------------------+------+------------+---------------+------------+---------+
|Finance income | | 81,815 | | 81,815 | 491 |
+------------------------------------------+------+------------+---------------+------------+---------+
|Profit before taxes | | 1,001,330 | (439,901) | 1,441,231 | 8,657 |
+------------------------------------------+------+------------+---------------+------------+---------+
|Income tax | I | (249,742) | 171,561 | (421,303) | (2,531) |
+------------------------------------------+------+------------+---------------+------------+---------+
| | | | | | |
+------------------------------------------+------+------------+---------------+------------+---------+
|Net profit (loss) before minority inerest | | 751,588 | (268,340) | 1,019,928 | 6,126 |
+------------------------------------------+------+------------+---------------+------------+---------+
|Minority interest | | 172,135 | | 172,135 | 1,034 |
+------------------------------------------+------+------------+---------------+------------+---------+
|Group net profit (loss) for period | | 579,454 | (268,340) | 847,794 | 5,092 |
+------------------------------------------+------+------------+---------------+------------+---------+
The yen/euro exchange rate applied to convert financial statements is the one at the closing of 31 October 2007, the transaction date, and equals 166.49 yen to the euro.
Non-core items were excluded from the aggregated financial statements as at 30 April 2007 as Eurotech did not consider them strategic for the Advanet Group and were disposed of before the closing date (31 October 2007) at their respective market value. The non-core items excluded were in the total amount of 2,807,226 Japanese yen and are primarily related to fixed assets and securities, gold, mutual funds and insurance policy investments.
Revenues from sales and services as at 30 April 2007 totalled E 32,953 thousand. 65% of revenues related to sales of finished products to Original Equipment Manufacturing customers, while the remaining 35% came from sales of standard products. The three most important customers of the Advanet Group as at 30 April 2007 accounted for 38% of total sales.
Total headcount for the consolidated companies as at 30 April 2007 was 140 units.
After the balance sheet date of 30 April 2007, the Advanet Group purchased 100% of the share capital of Spirit 21 and MovingEye Inc from related parties on 25 June and 23 August 2007 respectively. The price agreed upon was in the total amount of E4,434 thousand, against an accounting net capital of E3,132 thousand.
According to the agreements with potential acquirer Eurotech and before completion of the acquisition process by the latter of 65% of the company's share capital, the Advanet Group's companies sold what they considered to be non-core items within the Eurotech Group's development strategies. Sales were effected at fair value and they brought about capital gains as compared to the assets' book value. Gross of tax impact, the realized gain will be paid to the selling party as part of the sale price, given the price determination mechanism agreed upon by both parties.
PRO FORMA FINANCIAL AND ECONOMIC DATA OF ISSUER
The tables that follow illustrate the pro forma consolidated balance sheet and income statement of the Eurotech Group for the first half of 2007, which include the backdated impact of the Advanet Group acquisition transaction which occurred on 31 October 2007 and its financial effects.
The pro forma consolidated data were prepared in compliance with IFRSs; specifically, those of the Advanet Group are only related to "core" items which were part of the sale and could be subject to changes at the time of the effective posting of the acquisition of the Advanet Group in Eurotech's consolidated balance sheet as at 31 December 2007.
It should be noted that the accounting procedure for allocation of the price paid for the acquisition, as required by IFRS 3, has not been prepared as yet. Consequently, all allocations recognized for the purpose of preparing pro forma consolidated financial statements are to be considered as preliminary and may be subject to changes. Furthermore, should tangible and intangible assets with definite life and inventories determined at fair value be identified upon completion of the allocation process, the income statements shall also reflect amortization pertaining to such allocations and the margins posted to such inventories, not included in the expenses reported in the pro forma consolidated income statement.
Consolidated balance sheet as at 30 June 2007
+----------------------------------------------+-------------+-------------+----------+------+-------------+
| | 06/30/2007 | | | | |
+----------------------------------------------+-------------+-------------+----------+------+-------------+
| | | | | | |
+----------------------------------------------+-------------+-------------+----------+------+-------------+
| | UNAUDITED | UNAUDITED |PRO-FORMA |Notes | PRO-FORMA |
+----------------------------------------------+-------------+-------------+----------+------+-------------+
|(E'000) | EUROTECH |ADVANET CORE | ADJ.'S | |CONSOLIDATED |
+----------------------------------------------+-------------+-------------+----------+------+-------------+
| |CONSOLIDATED | AGGREGATED | | | |
+----------------------------------------------+-------------+-------------+----------+------+-------------+
| | IFRS | IFRS | | | |
+----------------------------------------------+-------------+-------------+----------+------+-------------+
| | | | | | |
+----------------------------------------------+-------------+-------------+----------+------+-------------+
|ASSETS | | | | | |
+----------------------------------------------+-------------+-------------+----------+------+-------------+
|Intangible assets | 57,541 | 170 | 40,281 | A | 97,992 |
+----------------------------------------------+-------------+-------------+----------+------+-------------+
|Property, Plant and equipment | 5,090 | 1,262 | | | 6,352 |
+----------------------------------------------+-------------+-------------+----------+------+-------------+
|Investments in associate and other companies | 717 | 11 | | | 728 |
+----------------------------------------------+-------------+-------------+----------+------+-------------+
|Deferred tax assets | 3,743 | - | | | 3,743 |
+----------------------------------------------+-------------+-------------+----------+------+-------------+
|Other non-current assets | 149 | - | | | 149 |
+----------------------------------------------+-------------+-------------+----------+------+-------------+
|Total non-current assets | 67,240 | 1,443 | 40,281 | | 108,964 |
+----------------------------------------------+-------------+-------------+----------+------+-------------+
|Inventories | 17,512 | 7,360 | | | 24,872 |
+----------------------------------------------+-------------+-------------+----------+------+-------------+
|Contracts in progress | 4,488 | - | | | 4,488 |
+----------------------------------------------+-------------+-------------+----------+------+-------------+
|Trade receivables | 13,121 | 6,242 | | | 19,363 |
+----------------------------------------------+-------------+-------------+----------+------+-------------+
|Other current assets | 7,432 | 2,361 | | | 9,793 |
+----------------------------------------------+-------------+-------------+----------+------+-------------+
|Positive fair value of derivative instruments | 132 | - | | | 132 |
+----------------------------------------------+-------------+-------------+----------+------+-------------+
|Cash & cash equivalents | 79,164 | 38,825 | (48,277) | B | 69,712 |
+----------------------------------------------+-------------+-------------+----------+------+-------------+
|Totale current assets | 121,849 | 54,788 | (48,277) | | 128,360 |
+----------------------------------------------+-------------+-------------+----------+------+-------------+
|Total assets | 189,089 | 56,231 | (7,997) | | 237,324 |
+----------------------------------------------+-------------+-------------+----------+------+-------------+
+-----------------------------------------+-------------+-------------+----------+------+-------------+
| | 06/30/2007 | | | | |
+-----------------------------------------+-------------+-------------+----------+------+-------------+
| | | | | | |
+-----------------------------------------+-------------+-------------+----------+------+-------------+
| | UNAUDITED | UNAUDITED |PRO-FORMA |Notes | PRO-FORMA |
+-----------------------------------------+-------------+-------------+----------+------+-------------+
|(E'000) | EUROTECH |ADVANET CORE | ADJ.'S | |CONSOLIDATED |
+-----------------------------------------+-------------+-------------+----------+------+-------------+
| |CONSOLIDATED | AGGREGATED | | | |
+-----------------------------------------+-------------+-------------+----------+------+-------------+
| | IFRS | IFRS | | | |
+-----------------------------------------+-------------+-------------+----------+------+-------------+
| | | | | | |
+-----------------------------------------+-------------+-------------+----------+------+-------------+
|Share capital | 8,751 | 555 | (555) | | 8,751 |
+-----------------------------------------+-------------+-------------+----------+------+-------------+
|Reserves | 130,289 | 9,750 | (9,453) | | 130,586 |
+-----------------------------------------+-------------+-------------+----------+------+-------------+
|Group shareholders' equity | 139,040 | 10,306 | (10,009) | | 139,337 |
+-----------------------------------------+-------------+-------------+----------+------+-------------+
|Equity attributable to minority interest | 76 | 3,132 | 1,174 | | 4,382 |
+-----------------------------------------+-------------+-------------+----------+------+-------------+
|Total shareholders' equity | 139,116 | 13,437 | (8,834) | C | 143,719 |
+-----------------------------------------+-------------+-------------+----------+------+-------------+
|Medium-/long-term borrowing | 14,454 | 20,773 | | | 35,227 |
+-----------------------------------------+-------------+-------------+----------+------+-------------+
|Bonded loan | - | 13,036 | | | 13,036 |
+-----------------------------------------+-------------+-------------+----------+------+-------------+
|Employee benefit obligations | 624 | 1,330 | | | 1,954 |
+-----------------------------------------+-------------+-------------+----------+------+-------------+
|Deferred tax liabilities | 7,850 | - | | | 7,850 |
+-----------------------------------------+-------------+-------------+----------+------+-------------+
|Other non-current liabilities | 500 | - | | | 500 |
+-----------------------------------------+-------------+-------------+----------+------+-------------+
|Total non-current liabilities | 23,428 | 35,139 | 0 | | 58,567 |
+-----------------------------------------+-------------+-------------+----------+------+-------------+
|Trade payables | 13,384 | 5,671 | | | 19,055 |
+-----------------------------------------+-------------+-------------+----------+------+-------------+
|Short-term borrowing | 5,014 | 491 | | | 5,505 |
+-----------------------------------------+-------------+-------------+----------+------+-------------+
|Tax liabilities | 764 | - | (599) | D | 165 |
+-----------------------------------------+-------------+-------------+----------+------+-------------+
|Other current liabilities | 7,383 | 1,493 | 1,437 | E | 10,313 |
+-----------------------------------------+-------------+-------------+----------+------+-------------+
|Total current liabilities | 26,545 | 7,655 | 838 | | 35,038 |
+-----------------------------------------+-------------+-------------+----------+------+-------------+
|Total liabilities | 49,973 | 42,794 | 838 | | 93,605 |
+-----------------------------------------+-------------+-------------+----------+------+-------------+
|Total liabilities and aquity | 189,089 | 56,232 | (7,997) | | 237,324 |
+-----------------------------------------+-------------+-------------+----------+------+-------------+
Pro forma consolidated income statement as at 30 June 2007
+---------------------------------------------+-------------+-------------+-----------+------+-------------+
| |Year-to-date | results as |at June 30 |2007 | |
+---------------------------------------------+-------------+-------------+-----------+------+-------------+
| | | | | | |
+---------------------------------------------+-------------+-------------+-----------+------+-------------+
| | UNAUDITED | UNAUDITED | PRO-FORMA |Notes | PRO-FORMA |
+---------------------------------------------+-------------+-------------+-----------+------+-------------+
|(E'000) | EUROTECH |ADVANET CORE | ADJ.'S | |CONSOLIDATED |
+---------------------------------------------+-------------+-------------+-----------+------+-------------+
| |CONSOLIDATED | AGGREGATED | | | |
+---------------------------------------------+-------------+-------------+-----------+------+-------------+
| | IFRS | IFRS | | | |
+---------------------------------------------+-------------+-------------+-----------+------+-------------+
| | | | | | |
+---------------------------------------------+-------------+-------------+-----------+------+-------------+
|Revenues from sales of products and services | 35,454 | 17,812 | | | 53,266 |
+---------------------------------------------+-------------+-------------+-----------+------+-------------+
|Other revenues | 146 | 107 | | | 253 |
+---------------------------------------------+-------------+-------------+-----------+------+-------------+
|Cost of materials | (17,683) | (7,024) | | | (24,707) |
+---------------------------------------------+-------------+-------------+-----------+------+-------------+
|Service costs | (6,737) | (365) | | | (7,102) |
+---------------------------------------------+-------------+-------------+-----------+------+-------------+
|Lease & hire costs | (732) | (1,689) | | | (2,421) |
+---------------------------------------------+-------------+-------------+-----------+------+-------------+
|Payroll costs | (10,596) | (2,931) | | | (13,527) |
+---------------------------------------------+-------------+-------------+-----------+------+-------------+
|Other provisions and other costs | (552) | (1,244) | | | (1,796) |
+---------------------------------------------+-------------+-------------+-----------+------+-------------+
|Cost adjustments for in-house generation of | | | | | |
+---------------------------------------------+-------------+-------------+-----------+------+-------------+
|non-current assets | 1,382 | 0 | | | 1,382 |
+---------------------------------------------+-------------+-------------+-----------+------+-------------+
|Depreciation & amortisation | (2,075) | (420) | | | (2,495) |
+---------------------------------------------+-------------+-------------+-----------+------+-------------+
|Asset impairment | (63) | 0 | | | (63) |
+---------------------------------------------+-------------+-------------+-----------+------+-------------+
|Operating profit | (1,456) | 4,246 | - | | 2,790 |
+---------------------------------------------+-------------+-------------+-----------+------+-------------+
|Share of associates' profit af equity | (39) | 0 | | | (39) |
+---------------------------------------------+-------------+-------------+-----------+------+-------------+
|Finance expense | (748) | (317) | (98) | | (1,163) |
+---------------------------------------------+-------------+-------------+-----------+------+-------------+
|Finance income | 1,546 | 370 | (1,027) | | 888 |
+---------------------------------------------+-------------+-------------+-----------+------+-------------+
|Profit before taxes | (697) | 4,299 | (1,125) | F | 2,477 |
+---------------------------------------------+-------------+-------------+-----------+------+-------------+
|Income tax | (203) | (1,676) | 371 | G | (1,508) |
+---------------------------------------------+-------------+-------------+-----------+------+-------------+
| | | | | | |
+---------------------------------------------+-------------+-------------+-----------+------+-------------+
|Net profit (loss) before minority interest | (900) | 2,622 | (754) | | 968 |
+---------------------------------------------+-------------+-------------+-----------+------+-------------+
|Minority interest | (4) | 1,147 | (229) | H | 914 |
+---------------------------------------------+-------------+-------------+-----------+------+-------------+
|Group net profit (loss) for period | (896) | 1,476 | (525) | | 55 |
+---------------------------------------------+-------------+-------------+-----------+------+-------------+
SUMMARY DESCRIPTION OF TERMS AND CONDITIONS OF THE TRANSACTION
On 31 October 2007 Eurotech acquired 65% of Advanet's share capital. The purchase price was initially set at a value of 7,695,843 thousand Japanese yen (hereinafter also JPY), consisting of 65% of a total amount of JPY 11,740,000 thousand (base consideration) and of 65% of 41.7% of a bonus paid by the Advanet Group companies to their own employees before completion of the transaction, equalling JPY 239,230 thousand. Based on results as at the acquisition date, such value will eventually be:
- increased to account for any net positive financial position;
- decreased to account for any net negative financial position;
- increased to account for net working capital in excess of the amount agreed upon by both parties of JPY 1,350,000 thousand;
- decreased to account for net working capital below the amount agreed upon by both parties of JPY 1,350,000 thousand.
Any adjustment to the base consideration subsequent to the determination of the net financial position and of net working capital shall be added algebraically to the same consideration within the limit of 65% of the shareholding acquired.
The initial value thus determined shall be augmented to include all ancillary expenses stemming from consideration paid to professionals who supported the company in completing the transaction, for an estimated amount of E 1,510 thousand.
The financial outflow related to the temporary cost of the aggregation, increased to account for the aforementioned ancillary expenses, and taking into account the foreign exchange procurement procedures, stands at E 48,277 thousand.
The acquisition was entirely funded by the cash available with Eurotech parent company. Specifically, in order to hedge the foreign exchange risk on the base consideration of JPY 7,631,000 thousand (65% of 11,740,000), the Company entered into an exchange rate forward agreement in the very first days of the month of October buying a spot rate of JPY 164.54 to the euro. At the closing date Eurotech paid the Seller 90% of the base consideration, and made a deposit of the remaining 10% on an ad hoc account to guarantee Eurotech against any indemnities required by the Seller for not abiding by any of the covenants and guarantees included in the acquisition agreement.
Furthermore, the shareholders' agreement with the seller and other Advanet shareholders provides for put and call option mechanisms on 25% of Advanet's share capital. Specifically, the agreement states that in the two months following approval of Advanet Group financial statements as at 31 December 2009, prepared in accordance with the Japanese accounting standards:
- Eurotech shall have a right to purchase ("call option") 25% of Advanet's share capital from Advanet's Other Shareholders, who shall have an obligation to sell, for a total consideration that will be computed by applying a multiple of 8 times Advanet Group's EBITDA as at 31 December 2009 after deducting the net financial position;
- Eurotech shall have a right to sell ("put option") to Eurotech, who shall have an obligation to purchase, 25% of Advanet's share capital, for a total consideration that will be computed by applying a multiple of 8 times the Group's EBITDA as at 31 December 2009 after deducting the net financial position;
It is finally provided that Mr Takeshi Komatsu (who will keep the remaining 10% of Advanet shares) shall have the right to sell to Eurotech the remaining 10% of Advanet shares, at the earlier of 5 years from the Closing Date or the date of termination of the employment relationship with Advanet Group, for whatever reason that may occur, at the market price of the shareholding to be determined based on an assessment made by both parties or by an independent expert.
The total estimated provisional cost of the 65% acquisition of Advanet Group as at 31 October 2007 may be summarised as follows:
+---------------------------------------------+-----+----------+-------+
| | | ¥'000 |E'000 |
+---------------------------------------------+-----+----------+-------+
| | | | |
+---------------------------------------------+-----+----------+-------+
|Base consideration | |7,631,000 |46,378 |
+---------------------------------------------+-----+----------+-------+
|Share of bonus paid to employees | | 64,843 | 389 |
+---------------------------------------------+-----+----------+-------+
|Initial expense | i) |7,695,843 |46,767 |
+---------------------------------------------+-----+----------+-------+
|Adjustment of consideration based on the Net | ii) | - | - |
+---------------------------------------------+-----+----------+-------+
|Financial Position as at the Closing date | | | |
+---------------------------------------------+-----+----------+-------+
|Consideration adjustment form Net | ii) | - | - |
+---------------------------------------------+-----+----------+-------+
|Working apital as at the Closing date | | | |
+---------------------------------------------+-----+----------+-------+
|Additional costs |iii) | | 1,510 |
+---------------------------------------------+-----+----------+-------+
|Put option on 25% of shares | iv) | - | - |
+---------------------------------------------+-----+----------+-------+
| | | | |
+---------------------------------------------+-----+----------+-------+
|Provisonal total acquisition cost | | |48,277 |
+---------------------------------------------+-----+----------+-------+
For the purpose of preparing pro forma consolidated data, the table below illustrates the book value of the net assets acquired (equity interest acquired in accordance with IFRSs) of the Advanet Group as at 30 April 2007, and the excess price paid which has been entirely posted to goodwill in order to prepare the attached pro forma schedules. The Advanet Group's equity as at 30 April 2007 is the latest available data before the Closing Date and was adjusted to include the effects of the bonus paid by the Selling party to the employees before the Closing Date net of any pertaining tax impact. The euro/yen exchange rate applied to convert the acquired equity, adjusted as of 30 April 2007, is the rate at the Closing Date and equals JPY 166.49 to the euro.
+---------------------------------------------------------------+-----+-------+
| E'000 | |Amount |
+---------------------------------------------------------------+-----+-------+
| | | |
+---------------------------------------------------------------+-----+-------+
|100% Equity of ADVANET Group preliminarily determined in | |13,140 |
+---------------------------------------------------------------+-----+-------+
|accordance with IFRSs (*) | | |
+---------------------------------------------------------------+-----+-------+
|Adjustment from employees bonuses net of tax impact | | (838) |
+---------------------------------------------------------------+-----+-------+
|100% Adjusted Equity of ADVANET Group preliminarily determined | i) |12,303 |
+---------------------------------------------------------------+-----+-------+
|compling with IFRSs (*) | | |
+---------------------------------------------------------------+-----+-------+
|65% Adjused Equity of ADVANET Group 65% preliminarily | ii) | 7,997 |
+---------------------------------------------------------------+-----+-------+
|determined complying with IFRSs (A) | | |
+---------------------------------------------------------------+-----+-------+
|Provisional cost of Business combination (B) |iii) |48,277 |
+---------------------------------------------------------------+-----+-------+
| | | |
+---------------------------------------------------------------+-----+-------+
|Total proforma Goodwill to be posted upon accounting for | |40,281 |
+---------------------------------------------------------------+-----+-------+
|business combination as per IFRS 3 (**) (B)-(A) | | |
+---------------------------------------------------------------+-----+-------+
* The equity used to determine pro-forma goodwill equals Advanet Group's equity determined in compliance with IFRS as of 30 April 2007, which is latest available data at the date of this document. Such value was converted based on the Euro/Yen exchange rate as at the Closing Date.
** Upon booking said acquisition, the Eurotech Group shall recognize the fair value of the main assets acquired (which may differ from the book value available at the time, preliminarily with regard to the Advanet brand, customer relationships, the orders portfolio and inventories) directly to the pertaining item, after recognizing the deferred tax impact if required. Any amount that will be directly recognized as goodwill shall only be a residual amount, equalling the acquisition cost in excess of the fair value, for the shares held, of all assets and liabilities identified as at the date in which control was transferred.
EUROTECH GROUP
Eurotech (ETH.MI) is a company active in the research, development, production and marketing of miniaturised computers (NanoPCs) and of computers featuring high-performance computing capability (HPCs).
Eurotech S.p.a. www.eurotech.com
Contacts:
Investor relations
Massimo Mauri
Tel. +39 0433-485411
e-mail:
[email protected]Communications Department
Cristiana della Zonca
Tel. +.39 0433-485411
e-mail:
[email protected]Press Office:
Community
Communication consulting
Marco Rubino
Tel. +39 02-89404231
e-mail:
[email protected]Copyright Hugin
The appendixes relating to the press release are available on:
http://www.companynewsgroup.com/documents/PJ/CO/2007/128678_88_E3ZL_ADVANET-PROFILE-1.pdf
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