| Thu 13 Mar 2008, 16:15 | | ILA - Iliad Africa Limited - Acquisition of the bu |
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ILA
ILA
ILA - Iliad Africa Limited - Acquisition of the business of b One Holdings
(PTY) limited as a going concern
Iliad Africa Limited
(Incorporated in the Republic of South Africa)
(Registration number 1997/011938/06)
Share code: ILA ISIN: ZAE000015038
("Iliad" or "the company")
ACQUISITION OF THE BUSINESS OF B ONE HOLDINGS (PTY) LIMITED AS A GOING CONCERN
1 Introduction
Further to the cautionary announcement dated 11 March 2008, shareholders are
hereby notified that Iliad Africa Trading (Pty) Limited ("the purchaser"), a
wholly-owned subsidiary of Iliad, has entered into an agreement to acquire the
business of B One Holdings (Pty) Limited ("B One") as a going concern, with
effect from 1 May 2008 ("the effective date"), subject to the fulfilment of the
conditions precedent set out in paragraph 4.2 below ("the acquisition").
2 Nature of business
B One specialises in the letting and hiring of portable ablution facilities,
site office containers, soil compactors and related accessories in the Gauteng
area.
3 Rationale for the acquisition
The acquisition was concluded for, inter alia, the following reasons:
* B One introduces Iliad to a growth market that it is presently not exposed
to, namely infrastructural spend;
* The business can be expanded into the rest of the country, where Iliad
already has a strong presence; and
* The business is the first on site during the construction process, which
may give the other Iliad group businesses a competitive advantage in
respect of the supply of products and services to new projects.
4 The transaction
4.1 The acquisition consideration
The purchaser will acquire the business for a consideration of
R104,370,000 ("the acquisition consideration"), subject to the adjustments
set out in paragraph 4.1.2 below. The acquisition consideration will be
settled as follows:
* by the purchaser paying, on the implementation date or the effective date,
whichever is the later, the sum of R52,185,000;
* by the purchaser paying, on 1 May 2009 or the day after the signature and
finalisation of the anniversary date financial statements for the 12 month
period ending on the anniversary date, whichever is the later, the sum of
R52,185,000 plus interest thereon at 8.5% compounded monthly in arrears
from 1 May 2008.
The acquisition consideration will be financed by Iliad from existing cash
resources and facilities available to the Group. The acquisition consideration
has been determined and agreed on the basis that B One has not declared any
dividends since 28 February 2007, will have a NAV of not less than R10,000,000
as at the effective date and the net profit before tax for the 12 months
following the effective date will be no less than R21,000,000 ("the profit
target").
4.1.1 The security
In order to secure the payment of the second tranche of the purchase
consideration amounting to R52,185,000, the purchaser will provide the
seller with an irrevocable bank guarantee.
4.1.2 Adjustments to the acquisition consideration
The agreement provides for the achievement of, inter alia, a warranted pre-
tax profit target for the guarantee period, being 12 months after the
effective date. Should the profit target not be met, the acquisition
consideration will be reduced on the basis of R4.97 for every R1
shortfall. If the profit target is exceeded, the acquisition
consideration will be increased by a rand-for-rand amount, subject to a
maximum acquisition consideration of R105,370,000.
4.2 Conditions precedent
The acquisition is subject to the fulfilment of, inter alia, the following
conditions precedent:
* unconditional approval by the Competition Commission;
* the satisfactory conclusion of a due diligence investigation by the
purchaser;
* Iliad board approval;
* the conclusion of lease agreements on all leased premises; and
* the conclusion of fixed term employment contracts and restraint of trade
agreements with key employees.
5 Financial effects of the transaction
Set out in the table below are the pro forma financial effects of the
transaction based on Iliad`s audited results for the year ended 31
December 2007. The pro forma financial effects have been prepared for
illustrative purposes only to provide information of how the transaction
may have impacted on the results and financial position of Iliad. Because
of their nature, the pro forma financial effects may not give a fair
reflection of Iliad`s financial position after the transaction or the
effect on future earnings. These pro forma financial effects are the
responsibility of the company`s directors.
Note Before the After the Percentage
transaction transaction change
(cents) 1 (cents) (%)
Earnings per share 2 169.0 173.5 2.6
(cents)
Headline earnings 2 168.4 172.9 2.7
per share (cents)
Net asset value 3 639.3 639.3 -
per share (cents)
Net tangible asset 3 319.5 255.1 (20.2)
value per share
(cents)
Note:
1 Extracted from the published audited results of Iliad for the year ended
31 December 2007.
2 Earnings and headline earnings per share are based on the following
assumptions:
* the acquisition was effective 1 January 2007;
* the expected acquisition consideration of R104.4 million;
* B One`s historical profit for the 12 month period ended 31 December 2007
is equal to the profit target;
* an adjustment has been made for the interest foregone on the R104.4
million utilised from existing cash resources and facilities available to
the Group to settle the purchase consideration;
* the weighted average number of Iliad Africa Limited shares in issue during
the year was 146 433 408; and
* in preparing these financial effects, no allocation between goodwill and
other intangibles has been done as required by IFRS3.
3 Net asset and Net tangible asset value per share are based on the
following assumptions:
* the acquisition was effective 31 December 2007;
* the net tangible assets of B One at the effective date are R10 million;
* the number of Iliad Africa Limited ordinary shares in issue at 31 December
2007 was 146 433 408;
* the entire purchase consideration was settled from existing cash resources
and facilities available to the Group; and
* in preparing these financial effects, no allocation between goodwill and
other intangibles has been done as required by IFRS3.
6 Withdrawal of cautionary and categorisation
Iliad is pleased to announce that the cautionary announcement dated 11
March 2008 is hereby withdrawn.
In terms of the Listings Requirements of the JSE Limited, this transaction
is classified as a category 2 transaction.
Johannesburg
13 March 2007
Sponsor: Bridge Capital Services (Pty) Limited
Attorneys: Fullard Mayer Morrison Incorporated
Date: 13/03/2008 16:15:06 Produced by the JSE SENS Department.
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