| Tue 17 Nov 2009, 12:57 | | DTH - DTH Dynamic Technology Holdings Limited - Disposal Of The Group`s Equity |
|
DTH
DTH
DTH - DTH Dynamic Technology Holdings Limited - Disposal Of The Group`s Equity
Interest In Offline Digital (Pty) Limited
DTH DYNAMIC TECHNOLOGY HOLDINGS LIMITED
(Registration Number: 2004/016984/06)
Share Code: DTH
ISIN: ZAE000124681
("DTH" or "the Company" or "the Group")
www.dth.co.za
DISPOSAL OF THE GROUP`S EQUITY INTEREST IN OFFLINE DIGITAL (PTY) LIMITED
THE TRANSACTION
DTH shareholders are hereby advised that an agreement ("the agreement") has
been reached between Media24 Limited ("Media24"), DTH, Offline Digital (Pty)
Limited ("Offline Digital"), Mr R Morison and Mr GH Barlow ("the Offline
Digital management shareholders") (collectively "the Sellers"), whereby
Media24 will acquire 100% of the issued share capital in and all claims
against Offline Digital (a 66,7% held subsidiary of DTH) for a total cash
consideration of R3,3 million ("the Transaction").
The effective date of the Transaction is 1 September 2009, notwithstanding the
signature date and fulfilment or waiver of the last of the suspensive
conditions as contained in the agreement.
CONSIDERATION
The cash consideration of R3,3 million pertaining to the Transaction is split
as follows:
DTH will receive a cash consideration of R2,2 million from the sale of 10 735
ordinary shares (66,7%) in Offline Digital; and the Offline Digital management
shareholders will collectively receive a cash consideration of R1,1 million
from the sale of 5,358 ordinary shares (33,3%) in Offline Digital.
BACKGROUND TO OFFLINE DIGITAL
Offline Digital is a specialist software development company that develops and
implements solutions for digital content management and publishing, and owns a
software framework upon which these solutions are developed.
DTH originally acquired a 66,7% equity interest in Offline Digital on 1
December 2007 for a cash consideration of R1,4m, with an option to acquire the
balance of the shares on 1 March 2010 according to a pre-determined formula.
The remaining equity interest in Offline Digital was held by the Offline
Digital management shareholders.
RATIONALE FOR THE TRANSACTION
Offline Digital is a niche solution provider which at the time of acquisition
complimented DTH`s objective of being a leading provider of custom software
and related services, however, Offline Digital remained too small and
specialised to be considered core to the business of DTH.
TERMS AND CONDITIONS
The Transaction is conditional upon the following suspensive conditions:
- that the board of directors of Media24 ratifies the execution of the
agreement, to the extent that it was not approved prior thereto;
- that the Offline Digital management shareholders sign letters of
appointment (which contain restraint of trade and confidentiality
undertakings) for a period of not less than one year, in the agreed form;
- that the board of directors of Offline Digital provide written proof to
the satisfaction of Media24 evidencing the release of Offline Digital
from all suretyships, guarantees or undertakings in respect of the
obligations of any third party;
- the repayment by Offline Digital of any shareholder loan accounts;
- the declaration and payment of a dividend of R500,000 (five hundred
thousand Rand) by Offline Digital to the Sellers proportionate to their
shareholding in Offline Digital as at the signature date; and
- the auditors certifying in writing that Offline Digital:
- is solvent and liquid as contemplated in section 90 of the Companies
Act immediately after the payment of the dividend contemplated
above; and
- has sufficient cash resources available to pay secondary tax on
companies in respect of the dividend contemplated above.
There are no performance warrantees, but the Sellers have provided Media24
with various other warranties normal to a sale of this nature.
APPLICATION OF PROCEEDS
The proceeds to be received by DTH on the disposal of its interest in Offline
Digital will be added to the Group`s reserves.
UNAUDITED PRO FORMA FINANCIAL EFFECTS
The unaudited pro forma financial effects on DTH before and after the
Transaction, as set out in the table below, are the responsibility of the
Company`s directors, and have been prepared for illustrative purposes only to
show how the Transaction may have affected DTH`s results for the 6 month
period ended 31 August 2009.
The unaudited pro forma financial effects, which, due to their nature, may not
fairly reflect DTH`s financial performance and position after the Transaction,
are based on the assumptions that:
- for the purpose of calculating earnings per ordinary share (basic and
diluted) and headline earnings per ordinary share (basic and diluted),
the Transaction was effected on 1 March 2009; and
- for the purpose of calculating net asset value and net tangible asset
value per ordinary share, the Transaction was effected on 31 August 2009.
Published Pro Forma Change Change
Before After (cents) (%)
(cents) 1 (cents)
Basic earnings per share 6,8 7,8 2, 4 1,0 14,7%
Headline earnings per share 6,8 6,8 2, 4 0,0 0,0%
Diluted earnings per share 6,8 7,8 2, 4 1,0 14,7%
Diluted headline earnings 6,8 6,8 2, 4 0,0 0,0%
per share
Net asset value per share 68,7 68,8 3, 5 0,1 0,1%
Net tangible asset value per 37,7 45,3 3, 5 7,6 20,2%
share
Weighted number of shares in 47,952,968 47,952,968
issue
Actual number of shares in 50,000,000 50,000,000
issue
Notes
1. The "Before" financial information has been extracted, without
adjustment, from DTH`s published unaudited interim results for the 6
month period ended 31 August 2009.
2. The "After" financial information reflects the reversal of DTH`s
66,7% equity accounted share of Offline Digital`s net profit after
tax of R137 165 for the 6 month period ended 31 August 2009.
Interest received on the cash consideration of R2,2m has been
calculated at 6,5% per annum. The taxation rate applicable is
assumed to be 28%.
3. The "After" financial information reflects the inclusion of DTH`s
66,7% equity accounted share of Offline Digital`s net profit after
tax of R137 165 on 31 August 2009. The proceeds of the sale have
been added to DTH`s reserves and the net asset value of Offline
Digital has been excluded on 31 August 2009. Minorities have been
de-recognised and goodwill of R1 085 987 has been realised. Capital
gains tax has been provided at an effective tax rate of 14%.
4. The basic and diluted earnings per share and basic and diluted
headline earnings per share figures are calculated based on weighted
average number of shares in issue of 47 952 968 shares at 31 August
2009.
5. The net asset value per share and net tangible asset value per share
have been calculated based on 50 000 000 shares in issue at 31
August 2009.
CATEGORISATION
In terms of the Listings Requirements of the JSE Limited, the Transaction is
deemed to be a Category 2 transaction and therefore does not require
shareholder approval.
Johannesburg
17 November 2009
Directors:
H Ratshefola (Chairman)*, C Wilkins (Group CEO), G Fowler (CFO), D M Hughes, J
Mamogale#, R Fehrsen#
*Non-executive directors, # independent non-executive directors
Auditors:
Andre Gerber
Greenwoods Chartered Accountants
Designated Advisor:
PSG Capital (Proprietary) Limited
Date: 17/11/2009 12:57:01 Produced by the JSE SENS Department.
The SENS service is an information dissemination service administered by the
JSE Limited (`JSE`). The JSE does not, whether expressly, tacitly or
implicitly, represent, warrant or in any way guarantee the truth, accuracy or
completeness of the information published on SENS. The JSE, their officers,
employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature,
howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
