Acquisition

RNS Number : 7020G

Velosi Limited

27 October 2008

 

27 October 2008

Velosi announces acquisition 

of a MajoRIty stake in PSC italy

Velosi Limited ('Velosi' or the 'Group'), a provider of asset integrity and HSE services to a number of major national and multinational oil and gas companies, is pleased to announce it has agreed to acquire a 60% stake in PSC Europe SRL ('PSC Italy') for an aggregate consideration of €1.8 million. The acquisition will give Velosi a strong platform with which to expand its presence in Italy's rapidly expanding natural gas market and the opportunity to offer the skills of PSC Italy's expert local team as part of the Group's broader service offering.  

Established in February 2002 PSC Italy is a successful business with strong client relationships amongst the major oil and gas operators. Headquartered in Dalmine, Italy its core business is in expediting and inspection as well as providing a range of other services including: consultation, supplier evaluation & ISO 9000 Audits, projects handling and follow-up. For the year ended 31^st December 2007 PSC Italy generated audited revenues of €6.5 million and pre-tax profit of €0.7 million. As at 31^st December 2007, Italy PSC had net assets of €0.4 million.

Natural gas is fast becoming the emerging fuel of Italy, with 70 billion cm of natural gas currently consumed per year. PSC Italy is well positioned within this market with a particular focus on the engineering and procurement phases. It is expected that PSC Italy's local market knowledge, combined with Velosi's existing presence in the natural gas market, and wider experience and expertise, will significantly enhance Velosi's ability to gain market share in this substantial marketplace. 

The consideration is to be satisfied by an initial payment of €0.9 million in cash and a further deferred consideration of up to €0.9 million to be paid on the basis of the business performance in the period from 1st January 2008 to 31st December 2010, in either cash or shares.

In addition, there are two call and put options over the remaining 40% interest in PSC Italy. The first option is exercisable for six months post 31 December 2010 for up to 50% of the balance of the vendors' shares. The second option is exercisable for twelve months, commencing five years from the date of acquisition, for the remaining shares. The option price will be settled in cash and will be based on a pro-rata percentage of a multiple of six times the average audited profit after tax and minority interests of PSC Italy for the 3 years preceding the exercise of the respective call or put option. 

Commenting on the acquisition Dr. Nabil Abdul Jalil, CEO of Velosi said: 'Given the signifcant opportunities in the natural gas market, Italy has for some time been a market which Velosi has been looking to enter. We believe the local knowledge and market presence of PSC Italy combined with the Group's broader international expertise will create a strong platform from which to win new contracts.'

The acquisition is in line with our model of taking majority stakes in successful profitable business in markets where the Group does not currently have a physical presence. Importantly, the PSC Italy management team will retain a significant shareholding in the ongoing business and we look forward to working closely with them to develop the opportunity.'

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For further information

Velosi	Dr Nabil Abdul Jalil Joe Vincent	020 7930 0777
Strand Partners	James Harris	020 7409 3494
Charles Stanley Securities	Mark Taylor Freddy Crossley	020 7149 6000
Cardew Group	Tim Robertson Shan Shan Willenbrock Catherine Maitland	020 7930 0777

Notes to editors:

About the Velosi Group

The Velosi Group, founded in 1982, provides asset integrity and HSE services to a number of leading national and multinational oil and gas companies, including BP, Shell, ExxonMobil and Chevron. The Velosi Group operates globally through four principal offices in the USA, the UK, Malaysia and the UAE and has operational or representative offices in a further 27 countries worldwide. Velosi joined the AIM market on 21 August 2006. For more information, visit www.velosi.com. 

 

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