| Mon 30 Mar 2009, 12:55 | | SBG - Simeka - Restructure Of Adcheck Investment And Sale Of Mint Net |
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SBG
SBG
SBG - Simeka - Restructure Of Adcheck Investment And Sale Of Mint Net
Simeka Business Group Limited
(Incorporated in the Republic of South Africa)
(Registration No. 2003/012583/06)
Share code: SBG ISIN code: ZAE000074878
("Simeka" or "the Company")
RESTRUCTURE OF ADCHECK INVESTMENT AND SALE OF MINT NET
INTRODUCTION
As notified to shareholders on 3 June 2008, with effect from 1 April 2008
Simeka acquired 50% of the shares in and claims on loan account against
Adcheck (Proprietary) Limited (Registration No. 1999/028286/07) ("Adcheck").
The cost to Simeka of this investment in Adcheck (the "Adcheck investment")
comprised an initial payment of R5 million settled by the issue of Simeka
shares at R1,00 per share (the "initial Adcheck payment") plus three
additional annual payments of up to a maximum amount of R45 million in
aggregate, the amounts of such additional payments to be determined with
reference to the PAT of Adcheck for the years ending 31 March 2009, 31 March
2010 and 31 March 2011.
Simeka has now concluded interconditional agreements in terms of which the
Adcheck investment is partially unwound (the "Adcheck partial unwind") and
Mint Net SA (Proprietary) Limited (Registration No. 1999/015895/07), a wholly
owned subsidiary of Simeka since 10 December 2008, is disposed of to Adcheck
(the "Mint Net disposal") in consideration for which Simeka will be issued
shares in Adcheck. Following implementation of both the Adcheck partial
unwind and the Mint Net disposal (together, the "transactions"), Simeka will
hold 50% plus 1 share in the issued share capital of Adcheck.
ADCHECK PARTIAL UNWIND
In terms of the Adcheck partial unwind, the parties have agreed that Simeka
will return to the Adcheck vendors 25% of the shares in and claims against
Adcheck and will pay to the Adcheck vendors R15 million (of which R10,5
million will be settled in cash and the balance by way of the issue of Simeka
shares at R0,50 per share) in settlement of the consideration owing in
respect of the 25% holding of shares in and claims against Adcheck retained
by Simeka. Accordingly, Simeka will pay R20 million in total for 25% of the
shares in and claims against Adcheck (comprising the initial Adcheck payment
plus the R15 million).
The Adcheck vendors have warranted in favour of Simeka that Adcheck`s PAT for
the 12 month period ended 31 March 2009 will not be less than R5 million and
insofar as it is less than this amount, the cash consideration of R15 million
will be proportionately reduced.
THE MINT NET DISPOSAL
In terms of the Mint Net disposal, Simeka will sell to Adcheck all of the
issued shares in and claims which it has against Mint Net for a consideration
of R20 million, which consideration will be settled by Adcheck by the
allotment and issue to Simeka of ordinary shares in the issued share capital
of Adcheck equivalent to 25% plus 1 share of the total issued share capital
in Adcheck. These consideration shares together with the shareholding which
Simeka already has in Adcheck (following the Adcheck partial unwind) will
result in Simeka owning 50% plus 1 share in the issued share capital of
Adcheck.
IMPLEMENTATION AND EFFECTIVE DATES OF TRANSACTIONS
The Adcheck partial unwind is conditional on all conditions to the Mint Net
disposal (set out below) having being fulfilled. The Adcheck partial unwind
will be implemented and will be effective from the date such conditions are
fulfilled.
Implementation of the Mint Net disposal remains conditional on the approval
thereof by the competition authorities in terms of the Competition Act.
Adcheck has undertaken and completed a due diligence investigation in regard
to Mint Net and has advised Simeka that it is satisfied with the outcome of
this investigation.
The effective date of the Mint Net disposal will be the business day
immediately following fulfilment of the above conditions precedent and the
implementation of the Adcheck partial unwind.
RATIONALE FOR THE TRANSACTIONS
Adcheck is a leading South African provider of custom primarily developed
mobile applications. Adcheck`s development takes place on the Microsoft
platform. Mint Net is a software solutions provider operating on the
Microsoft platform. As such, there are significant synergies that can be
realised between the businesses of Adcheck and Mint Net. From a strategic
point of view the board of Simeka consider that the synergies will be
realised sooner and more effectively if Mint Net is a subsidiary of Adcheck
and that Simeka`s investment in Adcheck will accordingly be enhanced.
Furthermore, as a consequence of the transactions Simeka has effectively paid
R40 million to acquire 50% plus 1 share in Adcheck, whereas under the terms
of the Adcheck investment it could have paid up to R45 million for 50% of the
shares in Adcheck.
FINANCIAL EFFECTS OF THE TRANSACTIONS
The pro forma financial effects of the transactions set out in the table
below are the responsibility of the company`s directors and have been
prepared for illustrative purposes only, to show the effect of the
transactions on Simeka`s published financial results for the 6 month period
ended 30 November 2008 (the "interim results").
Before the After the Change
transactions transactions
(cents) (cents) (%)
Earnings per share ("EPS") 8.84 9.88 11.79
Headline earnings per share ("HEPS") 8.81 8.51 (3.41)
Diluted EPS 8.14 9.11 11.97
Diluted HEPS 8.12 7.85 (3.26)
Net asset value ("NAV") per share 86.04 87.49 1.7
Net tangible asset value ("NTAV") per
share 9.10 5.33 (41.5)
Number of shares in issue (`000) 590 716 600 742
Weighted average number of shares in
issue (`000) 483 546 493 572
Weighed average number of shares in
issue and to be issued (`000) 524 942 534 968
Notes:
The "Before" column reflects the EPS, HEPS, NAV and NTAV per share as
disclosed in the interim results.
The "After" column reflects what the EPS and HEPS would have been had the
transactions taken place on 1 June 2008 and what the NAV and NTAV per share
would have been had the transactions taken place on 30 November 2008.
As a result of the transactions the net asset value of the company increases
by R31,8 million and the profit after tax of the company increases by R6
million.
FURTHER ANNOUNCEMENTS
A further announcement will be released on SENS once the conditions to the
transactions have been fulfilled and the transactions have been implemented.
30 March 2009
Designated advisor
Java Capital (Proprietary) Limited
Date: 30/03/2009 12:55:01 Produced by the JSE SENS Department.
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