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CONCEPT SPORTS LIMITED
(ASX: CCS)
ASX ANNOUNCEMENT
2 July 2007
Acquisition and FY07 Guidance
Concept Sports Limited (ASX: CCS) (the Company) is pleased to announce that it has
entered into an agreement to purchase Kea Designer Sportswear (Kea - ACN 006
902 405) for $3.4 million.
Kea has a solid revenue and profit track record as an Australian based manufacturer
and exporter of sportswear. Kea was established in 1988 and has traded profitably in
the year to June 2007 on revenue of approximately $7.5 million.
The Directors believe that the Kea acquisition strengthens the Company’s position in
both the local and overseas retail markets and look forward to a successful integration
and potential synergy benefits.
Kea founder and Managing Director, Mr. Michael Erwin, will continue with the
company as Executive General Manger – Kea. Mr. Erwin brings a wealth of industry
experience and enhances the group’s management depth.
Strategic Benefits
The acquisition has the following strategic benefits for the Company:
• provides an established customer base of schools, clubs, associations and
individuals;
• has a low cost manufacturing arrangement in China which can be utilised by
the Company;
• provides the opportunity to benefit from the synergies that exist between the
two businesses;
• provides increased revenue opportunities for both businesses;
• improves revenue stability.
Acquisition Funding
To immediately fund the acquisition the Company has secured bridging finance of
$2,250,000 at a 10% interest rate from the Transition Group. This loan is to be repaid
upon receipt of funds from an Equity Line of Credit to be agreed with Furneaux Equity
Limited.
Concept Sports Limited ASX Announcement 2 July 2007
The terms of the Equity Line of Credit are to be approved by shareholders. The key
terms of the agreement are:
• an ability to redeem (in part or full) the Equity Line of Credit for either cash or
shares, at the Company’s option, for a period of up to 210 days;
• conversion can be done in 6 tranches at monthly intervals commencing
November 15, 2007 at the lower of; a fixed conversion price of 0.11 cents or at
a 10% discount to the prevailing 10 day VWAP prior to the conversion;
• a 6.25% implementation fee on a principal amount of $2.4 million; and
• a 9.0% per annum interest rate until redemption or conversion.
FY07 Guidance
Directors are pleased to advise that the Company’s trading performance has
continued to improve and the operating profit in the year ending June 2007 is
expected to be approximately $1.0 million.
This FY07 profit guidance compares with a net profit of $0.17 million in the first half
ending December 2006 and a net loss from operations of $3.95 million in the year
ending June 2006.
-ENDFurther
enquiries:
Gary March
Managing Director
Concept Sports Limited