| Mon 1 Jun 2009, 9:55 | | UCS - UCS Group Limited - Announcement Regarding A Proposed Specific Repurchase |
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UCS
UCS
UCS - UCS Group Limited - Announcement Regarding A Proposed Specific Repurchase
And Small Related Party Transaction
UCS Group Limited
(Incorporated in the Republic of South Africa)
(Registration number 1993/002253/06)
JSE code: UCS
ISIN: ZAE000016150
("UCS" or "the company" or "the Group")
ANNOUNCEMENT REGARDING A PROPOSED SPECIFIC REPURCHASE AND SMALL RELATED PARTY
TRANSACTION
1. Introduction
On 27 March 2007, UCS announced the details of the acquisition of a 51% interest
in the equity of DiverseIT (Proprietary) Limited, formerly known as 3J Holdings
(Proprietary) Limited, ("DiverseIT") ("the original DiverseIT transaction").
Prior to the implementation of the original DiverseIT transaction, all of the
equity in DiverseIT was held by management members of the DiverseIT group of
companies ("the MBI Team").
2. Rationale
The strategic fit for DiverseIT within the Group did not materialise and it has
therefore been identified as a non-core investment. The interest demonstrated
by the MBI Team to repurchase the 51% of DiverseIT held by UCS presented an
ideal opportunity for UCS to dispose of the 51% interest through an effective
unwind of the original DiverseIT transaction ("the disposal") and the specific
repurchase by UCS of 4 837 944 shares ("the specific repurchase shares") from
the MBI Team ("the specific repurchase") as part of the disposal (collectively
"the transaction").
3. Terms of the specific repurchase
In terms of a sale of shares agreement concluded on 12 May 2009 between UCS and
the MBI Team ("the Sale of Shares Agreement") governing, inter alia, the
effective unwinding of the original DiverseIT transaction and the terms and
conditions of the specific repurchase, UCS will, subject to the requisite
shareholder approval required for the specific share repurchase, sell the 51%
interest in DiverseIT back to the MBI Team, in return for which UCS will:
receive a payment of R 5 000 000 in cash;
take delivery of 241 897 Argility Limited shares at R 1-50 per share (received
by the MBI Team as the holders of UCS shares pursuant to the unbundling of
Argility Limited from the Group during 2007); and
take delivery of the specific repurchase shares at R 1-50 per share by way of
the specific repurchase.
Following the specific repurchase, application will be made to the JSE Limited
("the JSE") for the cancellation of the specific repurchase shares. UCS will
continue to comply with the shareholder spread requirements of the JSE.
4. The disposal
The disposal consideration of R 12 619 761-50 is set out as follows:
- The specific repurchase shares at R 1-50 per share;
- The 241 897 Argility shares at R 1-50 per share; and
- R 5 000 000-00 in cash.
As the disposal falls below the categorization requirements of the JSE,
shareholder approval for the disposal is not required.
5. Fairness opinion
Two of the members of the MBI Team, Messrs KC Venn and G Matheson (being
directors and beneficial shareholders of DiverseIT, which is currently a 51%
held subsidiary of UCS) are also directors of Computerkit Holdings (Proprietary)
Limited, a 100% held subsidiary of UCS.
Accordingly, the transaction will be deemed a small related party transaction in
terms of Section 10 of the Listings Requirements.
UCS has appointed KPMG Services (Proprietary) Limited as independent
professional expert to provide an opinion in terms of the fairness of the terms
of the small related party transaction and the specific repurchase respectively.
Their opinion will be set out in the circular to shareholders, of which details
are provided below.
6. Pro forma financial effects
The pro forma financial effects set out in this paragraph have been prepared to
assist shareholders to assess the impact of the disposal and associated specific
repurchase on the earnings per share, diluted earnings per share, headline
earnings per share, diluted headline earnings per share, net asset value ("NAV")
per share and tangible net asset value ("TNAV") per share and are based on the
reviewed results for the six months ended 31 March 2009.
Due to their nature, the pro forma financial effects may not fairly present
UCS`s financial position, changes in equity and results of operations or cash
flows.
The pro forma financial effects are the responsibility of the UCS directors and
have been prepared for illustrative purposes only.
Per UCS share Before 1 Change After 2+3 Change
(cents) (cents) (cents) (%)
Earnings 0.1 (2.6) (2.5) (2 600)
Diluted earnings 0.1 (2.6) (2.5) (2 600)
Headline earnings 5.2 (0.1) 5.1 (1.9)
Diluted headline 5.1 (0.1) 5.0 (2.0)
earnings
NAV 161.1 (1.7) 159.4 (1.1)
TNAV 21.7 (1.4) 20.3 (6.5)
Notes:
1. Based on the published reviewed results of UCS for the six months ended 31
March 2009. For purposes of the calculations, the weighted average number of
shares, the diluted weighted average number of shares and the actual number of
UCS shares in issue (net of treasury shares) at 31 March 2009 are 290.7 million,
296.1 million and 292.1 million, respectively.
2. Based on the assumption that the specific repurchase was effected on 1
October 2008 for income statement purposes and on 31 March 2009 for balance
sheet purposes. For the purposes of the calculations, the weighted average
number of shares, the diluted weighted average number of shares and the actual
number of UCS shares in issue (net of treasury shares) at 31 March 2009 are 286
million, 291.2 million and 287.2 million, respectively.
3. Included in the "After" earnings and headline earnings are the following
adjustments and related assumptions:
a. The reversal of the DiverseIT contribution to earnings and headline
earnings for the six months ended 31 March 2009 of R0.5 million.
b. Estimated R11.7 million disposal consideration comprising the specific
repurchase shares valued at R1.30 per share i.e. the closing share price as at
31 March 2009, 241,897 Argility shares valued at R1.50 per share and R5 million
in cash.
c. Estimated transaction costs of R0.3 million incurred in relation to the
disposal and specific buyback.
d. The specific repurchase shares being cancelled and the number of ordinary
and weighted average shares in issue reduced accordingly.
4. The net asset value per share and tangible net asset value per share were
not adjusted for any costs relating to the specific repurchase and are based on
the specific repurchase having been effected on 31 March 2009.
7. Suspensive conditions
The specific repurchase is authorised in terms of Article 38 of the company`s
Articles of Association and the transaction is subject to the following
suspensive conditions being fulfilled by no later than 30 June 2009:
7.1 the Sale of Shares Agreement becoming unconditional in accordance with its
terms;
7.2 the MBI Team providing UCS with an irrevocable bank guarantee in respect of
the R 5 000 000 cash consideration;
7.3 approval by shareholders of UCS in general meeting;
7.4 registration by Companies and Intellectual Property Registration Office of
the special resolution relating to the specific repurchase; and
7.5 any other regulatory approvals that may be required.
8. Effective date
The effective date of the specific repurchase will be the business day following
the Sale of Shares Agreement becoming unconditional.
9. Documentation
A circular, providing further information on the specific repurchase and
containing, inter alia, a notice of general meeting and a form of proxy will be
posted to shareholders on or about Monday, 1 June 2009.
10. Important dates and times
The following important dates and times apply to the specific repurchase.
2009
Circular posted to shareholders on Monday, 1 June
Last day to lodge forms of proxy for the
general meeting by 09:00 on Monday, 22 June
General meeting to be held at 09:00 on Wednesday, 24 June
Results of general meeting published on SENS Wednesday, 24 June
on
Results of general meeting published in the Thursday, 25 June
press on
Special resolution lodged for registration on Thursday, 25 June
Anticipated implementation of the repurchase Tuesday, 30 June
Notes:
1. These dates and times are subject to change. Any such change will be
published on SENS and in the press. Any reference to time is a reference to
South African time.
2. If the general meeting is adjourned or postponed, forms of proxy must be
received by no later than 48 hours prior to the time of the adjourned or
postponed general meeting, provided that, for the purpose of calculating the
latest time by which forms of proxy must be received, Saturdays, Sundays and
gazetted public holidays in South Africa will be excluded.
Johannesburg
1 June 2009
Sponsor Independent Attorneys Independent
Reporting Professional
BJM Corporate Accountants Glyn Marais Expert
Finance Deloitte & Touche Incorporated KPMG Services
(Proprietary) Registered Auditors (Proprietary)
Limited Limited
Date: 01/06/2009 09:55:02 Produced by the JSE SENS Department.
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