| Thu 14 Feb 2008, 17:10 | | WKF - Workforce - Acquisition of Telebest Group and withdrawal of cautionary |
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WKF
WKF
WKF - Workforce - Acquisition of Telebest Group and withdrawal of cautionary
announcement
Workforce Holdings Limited
(Registration number 2006/018145/06)
(JSE code: WKF & ISIN number: ZAE000087847)
("Workforce" or "the Company")
ACQUISITION OF TELEBEST GROUP AND WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT
1. Introduction
Further to the cautionary announcements dated 19 November 2007 and 4 January
2008 respectively, Workforce is pleased to announce that it has concluded final
written agreements for the acquisition of Telebest Holdings (Proprietary)
Limited ("Telebest") and its subsidiaries ("the Telebest Group") from
Recruitment Investment and Management Services Incorporated (Canada)and
Jonathan Dawkins ("the acquisition").
The acquisition is classified as a Category 2 transaction in terms of the
Listings Requirements of the JSE Limited ("Listings Requirements") and in
accordance therewith the information set out below is provided.
2. Nature of business
The Telebest Group is focused on the placement of temporary, contract and
permanent staff for office support and administration positions and for the
call centre industry. The main operating subsidiaries are Only The Best and
Teleresources as well as an interest in Khetha Staffing Services. Telebest has
offices in Randburg, Pretoria, Cape Town and Durban with a wide range of
clients.
3. Rationale
The acquisition is in line with Workforce`s strategy of increasing its exposure
to segments of the staff outsourcing industry where it currently does not have
strong representation. Workforce currently has a small exposure to the white
collar sector and this acquisition provides it with an opportunity to
significantly increase its presence in the white collar sector as well as the
call centre industry.
4. Consideration and terms
The total consideration payable for the acquisition is anticipated to amount to
approximately R50 million. An amount of R31,3 million is to be paid initially
(the initial amount") and the balance will be paid at the end of April 2010,
dependent on the profits of Telebest for the three years ending 31 December
2009.
The initial amount is to be paid from the existing cash resources and debt
facilities of Workforce. Subsequent to the release of its year end results
Workforce intends to issue shares for cash for a portion of the purchase price
in order to maintain an appropriate gearing ratio. The exact portion will only
be finalised at that time.
The acquisition is subject to terms and warranties usual for a transaction of
this nature. Subsequent to the implementation of the acquisition the articles
of association of Telebest and its subsidiaries will be amended in conformance
with the Listings Requirements.
5. Effective date and conditions precedent
The effective date of the acquisition was 29 October 2007. The majority of the
conditions precedent have been fulfilled, including the approval by the
Competition Commission. The outstanding conditions precedent are anticipated to
be fulfilled shortly, and the initial payment will be made on the first
business day following the fulfillment of the last condition precedent.
6. Financial effects
The pro forma financial effects of the Telebest acquisition on Workforce`s
historical earnings per share and headline earnings per share for the six
months ended 30 June 2007, and net asset value per share and tangible net asset
value per share as at 30 June 2007, are set below:
The pro forma financial effects have been prepared for illustrative purposes
only, to provide information on how the acquisition may have impacted on the
historical results and financial position of Workforce and are presented in a
manner consistent with the accounting policies adopted by Workforce and have
been adjusted as described in the notes below.
Because of their nature, the financial effects may not give a fair reflection
of Workforce`s financial position after the acquisition or the effect of the
acquisition on Workforce`s future earnings. The pro forma financial effects are
the responsibility of the directors of Workforce.
Six Six % change
months months
ended 30 ended
June 30 June
2007 2007
Before After
(cents) (cents)
Earnings per share 4.98 5.62 12.8%
Headline earnings per share 4.98 5.62 12.8%
Net asset value 58.74 62.19 5.9%
Net tangible asset value 56.96 45.56 (20.0%)
Weighted average shares in 240,000 250,000 4.2%
issue (000`s)
Number of shares in issue 240,000 250,000 4.2%
(000`s)
Notes:
1. The amounts in the "before" column have been extracted from Workforce`s
interim results for the six months ended 30 June 2007.
2. The amounts in the "after" column have been calculated with reference to the
following:
-that the acquisition had been effective from 1 January 2007 for income
statement purposes;
-the management accounts of Telebest for the six months ended 30 June
2007, which reflect a profit before tax of R4,0 million after adjusting
for items specifically excluded from the acquisition;
-the balance sheet of Telebest as at 29 October 2007, being the effective
date of the acquisition;
-that the initial portion of the purchase price had been settled in cash,
and had been funded from borrowings of R16,6 million and the issue of 10
million shares for cash at R1,45 per share, being the 30 day volume
weighted average to 13 February 2008;
-that the total cost of the acquisition will amount to R50,5 million,
including costs of approximately R1,5 million; and
-A purchase price allocation will need to be performed at the effective
date in terms of IFRS3 Business Combinations. For the purpose of these pro
forma financial effects, the difference between the anticipated cost of
the acquisition and the net carrying value of R14,5 million in respect of
the assets and liabilities acquired, amounts to R37,3 million and has been
allocated to goodwill.
7. Withdrawal of cautionary announcement
As a result of this announcement, the cautionary announcement is hereby
withdrawn.
Johannesburg
14 February 2008
Designated Advisor
Ernst & Young Sponsors (Pty) Ltd
(Reg. No. 2000/031843/07)
Date: 14/02/2008 17:10:17 Produced by the JSE SENS Department.
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