| Thu 15 Nov 2007, 14:37 | | VOX - Vox Telecom - Pro Forma Financial Effects O |
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VOX
VOX
VOX - Vox Telecom - Pro Forma Financial Effects Of Recent Acquisitions And
Share Issue And Withdrawal Of Cautionary Announcement
VOX TELECOM LIMITED
(formerly DataPro Group Limited)
(Registration number 1998/016433/06)
("Vox Telecom" or "the Company" or "the Group")
JSE Code: VOX
ISIN Code: ZAE000097234
PRO FORMA FINANCIAL EFFECTS OF RECENT ACQUISITIONS AND SHARE ISSUE AND
WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT
1. Introduction
Vox Telecom announced on SENS on 5 October 2007 that it will acquire,
through its wholly owned subsidiary, @tlantic Internet Services
(Proprietary) Limited ("@lantic"), the customer contracts and certain
computer hardware ("the ABSA acquisition") from Absa Internet Access
("AIA"), a division of Absa Bank Limited. Vox Telecom further announced on
10 October 2007 that it had entered into a binding agreement ("the Storm
Acquisition"), to acquire the entire issued share capital and claims on
loan account in STWS Limited and its wholly owned subsidiaries, Storm
Telecom (Pty) Limited and Storm Internet (Pty) Limited (collectively,
"Storm"), with effect from 1 December 2007, from Storm`s shareholders
("Storm Vendors") (collectively, the "Proposed Transactions").
The Proposed Transactions remain subject to the conditions precedent set
out in paragraph 4 below.
2. Pro forma financial effects
Set out in the table below are the pro forma financial effects of the
Proposed Transactions, which have been prepared for illustrative purposes
only, to provide information about how the Proposed Transaction might have
affected the financial information presented in respect of Vox Telecom`s
results for the six months ended 31 August 2007. The pro forma financial
effects, because of their nature, may not give a true reflection of the
financial position of Vox Telecom.
Before the After the Percentage
Proposed Proposed change (%)
Transactions Transactions
Earnings 4.90 5.25 7.14
(cents per share)
Headline earnings 4.90 5.25 7.14
(cents per share)
Net asset value 72.65 99.88 37.48
(cents per share)
Tangible net asset (12.97) (10.01) 22.82
value
(cents per share)
Weighted average 883,856 1,073,856
number of shares in
issue for the six
months ended 31 August
2007 (`000)
Number of shares in 883,856 1,073,856
issue (net of treasury
shares) as at 31
August 2007 (`000)
Notes:
i) The earnings and headline earnings per Vox Telecom share, as set out in the
"Before" column of the table, are based upon the audited financial results
of Vox Telecom for the twelve months ended 31 August 2007 from which the
unaudited published results for the six months ended 28 February 2007 were
deducted.
ii) The earnings and headline earnings per Vox Telecom share, as set out in the
"After the Proposed Transactions" column of the table, are based upon the
audited financial results of Vox Telecom for the twelve months ended 31
August 2007 from which the unaudited published results for the six months
ended 28 February 2007 were deducted, including the unaudited results as
per management accounts of AIA and Storm for the six months ended,
respectively, 31 August 2007 and 31 October 2007, and the assumptions that:
- the Proposed Transactions were effective from 1 March 2007;
- the purchase considerations were settled on 1 March 2007 through
existing cash resources and the issue of 190 million Vox Telecom
shares with net proceeds to Vox Telecom of R402 800 000 in terms of a
BEE transaction announced on SENS on 8 November 2007 ("Vendor
Shares");
- costs specifically excluded in the Storm Acquisition agreement were
not incurred by Storm, which is discussed in more detail in paragraph
3.1 below;
- the effective tax rate is 29%;
- transaction fees amounting to R8 million were incurred relating to the
Proposed Transactions; and
- there was no impairment of the goodwill arising from the Proposed
Transactions.
iii) The net asset value and tangible net asset value per Vox Telecom share, as
set out in the "Before" column of the table, are based upon the audited
balance sheet of Vox Telecom as at 31 August 2007.
iv) The net asset value and tangible net asset value per Vox Telecom share, as
set out in the "After the Proposed Transactions" column of the table, are
based upon the audited balance sheet of Vox Telecom as at 31 August 2007,
including the unaudited balance sheet of AIA and Storm as at, respectively,
31 August 2007 and 31 October 2007, as per management accounts, and the
assumptions that:
- the Proposed Transactions were effective 31 August 2007;
- transaction fees amounting to R8 million were incurred; and
- the Vendor Shares were issued on 31 August 2007.
3. Rationale for Proposed Transactions
3.1 Storm Acquisition
Vox Telecom`s strategy is for the Group to be the preferred
telecommunications alternative to the domestic incumbents, in the rapidly
converging and deregulating industries of voice and data.
The Storm Acquisition is regarded as being material for Vox Telecom and
highly strategic as it will considerably improve Vox Telecom`s positioning
in the Voice-over-IP ("VoIP") telephony market and augments Vox Telecom`s
corporate customer profile and market share.
Vox intends integrating Storm`s telephony customers into its wholly owned
subsidiary responsible for corporate telephony solutions, Orion Telecom
(Proprietary) Limited ("Orion") and the Internet customers into its wholly
owned subsidiaries responsible for corporate ISP services, DataPro
(Proprietary) Limited ("DataPro") and consumer ISP services, @lantic.
In terms of the Storm acquisition agreements, certain costs currently being
incurred by Storm are specifically excluded, amounting to R30 million per
annum and will accrue in the hands of Vox Telecom immediately on handover
of the business. Significant other cost savings and synergy benefits are
anticipated from the integration which have not been incorporated into the
pro forma effects set out above. All costs associated with the
rationalisation remain for the sole account of the Storm Vendors.
Most significantly, Vox Telecom as a trade buyer, is in a distinctive
position whereby it is able to utilise its existing synergistic cost
structures and telephony platform to leverage material, accretive
contributions from Storm`s contracted annuity customer base, without adding
materially to Vox Telecom`s overall overhead structures.
Storm is anticipated to improve the scale and strategic position of Vox
Telecom`s existing telephony businesses, particularly the VoIP technology
and contracted managed services VoIP customer base. Similarly, the addition
of Storm`s internet customer base will solidify DataPro`s corporate ISP
positioning as a leading service provider in this market domestically.
3.2 AIA
The AIA acquisition, in addition to being earnings accretive, is regarded
as significant and strategic for both @lantic and Vox Telecom, as it will
considerably improve the Group`s positioning as a domestic consumer
Internet Service Provider ("ISP") as well as augmenting the Group`s overall
consumer customer base and market share.
Vox Telecom intends integrating the AIA customer base into its wholly owned
subsidiary responsible for consumer ISP solutions, namely @lantic. The
addition of AIA`s customer base will solidify @lantic`s consumer ISP
positioning as a major ISP domestically.
Vox as a trade buyer, is in a position to leverage material, accretive
contributions from AIA`s contracted annuity customer base, without adding
materially to Vox Telecom`s overhead structures.
4. Conditions Precedent
The Proposed Transactions remain, inter alia, conditional upon the
following conditions precedent:
4.1 the Proposed Transactions being approved in terms of the Competition Act,
89 of 1998;
4.2 by not later than 31 January 2007, Vox Telecom obtains the consent of the
Exchange Control Department of the South African Reserve Bank ("SARB") to
purchase Storm; and
4.3 by not later than 31 January 2007 those of the sellers who require the
consent of the Exchange Control Department of the SARB to remit their share
of the Storm purchase consideration offshore, obtain such consent.
5. Further Announcements and Withdrawal of Cautionary Announcement
Further announcements will be made on SENS as soon as any of the remaining
outstanding conditions precedent have been fulfilled or waived, as the case
may be.
Vox Telecom Shareholders are advised that caution is no longer required to
be exercised by shareholders when dealing in their Vox Telecom securities.
Johannesburg
15 November 2007
Corporate Advisor
Metier Advisory (Proprietary) Limited
Designated Advisor
Arcay Moela Sponsors (Proprietary) Limited
Date: 15/11/2007 14:37:26 Produced by the JSE SENS Department.
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