| Tue 8 Dec 2009, 7:05 | | SVB - SilverBridge - Acquisition Of The Businesses Of Grayston Technology |
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SVB
SVB
SVB - SilverBridge - Acquisition Of The Businesses Of Grayston Technology
Investments (Pty) Ltd And Withdrawal Of Cautionary Announcement
SilverBridge Holdings Limited
(Incorporated in the Republic of South Africa)
(Registration number: 1995/006315/06)
Share code: SVB & ISIN: ZAE000086229
("SilverBridge" or the "Group")
ACQUISITION OF THE BUSINESSES OF GRAYSTON TECHNOLOGY INVESTMENTS (PTY)
LTD AND WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT
1. Introduction and terms
The board of SilverBridge is pleased to announce that the Group has
reached agreement, through its wholly owned subsidiary Tiespro 181
(Pty) Ltd, to purchase the Acczone Academy business and the Acczone
Software business from Grayston Technology Investments (Proprietary)
Limited ("the vendor") ("the acquisition"). Tiespro 181 (Pty) Ltd
will change its name to Acczone Systems (Pty) Ltd ("Acczone").
The effective date of the acquisition is 1 December 2009.
2. Rationale for the acquisition
SilverBridge offers integrated, flexible and cost-effective business
administration solutions to the providers of financial services. The
Group currently operates through two subsidiaries, namely SDT, which
specialises in life and employment benefit administration software
and Ones & Zeros ("ONZ") which offers consulting services to
financial service institutions. The Group`s stated strategy is to
expand into other pillars of financial services and, over the medium
term, specifically into, inter alia, loans administration software.
Acczone is and will continue to be a Sage development partner. Sage
is an international provider of business management software and
services. Acczone is a leading provider of loan administration
software for midmarket and enterprise organisations in Africa.
Acczone has developed its own loan administration software which
also integrates with Sage Accpac ERP suite of products as well as
SageCRM. As such, it complements and expands the current
SilverBridge offerings.
SilverBridge, through its subsidiary, is acquiring the business of
the vendor inclusive of the intellectual property, partnerships and
client contracts. Management and staff of the vendor will be
retained within the Group to ensure continuity of projects, customer
relationships and product integrity.
3. Calculation of the purchase consideration
Silverbridge shall make available to Acczone a R3 million short term
loan facility to fund the continued development of the acquired
software ("the loan").
The purchase consideration will be settled partly in cash ("the cash
consideration") and partly by the issue of new Silverbridge shares
("the equity consideration").
The purchase consideration will be determined by applying a
specified multiple to the net profit after tax of Acczone as
recorded in its annual financial statements for the twelve months
ended 28 February 2011 ("2011 AFS") and subtracting the loan from
the result. The purchase consideration is capped at a maximum of
R18 million.
The specified multiple for the cash consideration will be 2.8. The
specified multiple for the equity consideration will be 35% of the
corresponding Silverbridge price:earnings multiple, with a minimum
of 2. The intention behind the purchase consideration is to arrive
at a PE that is approximately 70% of the SilverBridge PE as at 28
February 2011.
4. Settlement of the purchase consideration
The cash consideration will be settled as follows:
- R3 million payable on the effective date; and
- The balance, if any, upon the completion and approval of the
2011 AFS.
The equity consideration will be settled as follows:
- The issue of Silverbridge shares, at an issue price of R1,65
per Silverbridge share, upon the completion and approval of the
audited financial statements for the three months ended 28
February 2010 ("the 2010 AFS). The number of shares to be
issued shall be calculated by applying a multiple of 4 to the
audited net profit after tax as recorded in the 2010 AFS.
- The balance, if any, upon the completion and approval of the
2011 AFS by the issue of new Silverbridge shares at the 30-day
volume weighted average price to 28 February 2011.
5. Financial effects
The unaudited pro forma financial effects of the acquisition, based
on the published unaudited results of SilverBridge for the interim
period ended 31 August 2009 are set out below. The unaudited pro
forma financial effects have been prepared for illustrative purposes
only to provide information on how the acquisition may have impacted
on the results and financial position of SilverBridge. Preparation
of the unaudited pro forma financial effects is the responsibility
of the directors. Because of their nature, the pro forma financial
effects may not fairly present SilverBridge`s financial position
after the acquisition or the effect on future earnings:
Before the After the % Change
acquisition acquisition -
(1) pro
forma(2&3)
Earnings (cents per 15.25 15.37 0.8%
share)
Headline earnings 15.02 15.14 0.8%
(cents per share)
Net asset value (cents 136 136 0.0%
per share)
Net tangible asset 77 68 -11.4%
value (cents per share)
Weighted average number 33 773 33 773 0.0%
of shares in issue (In
thousands)
Number of shares in 34 232 34 232 0.0%
issue (In thousands)
Notes and assumptions:
(1) The figures in the "Before" column are extracted from the
Group`s published unaudited interim results for the six month
period ended 31 August 2009.
(2) Earnings and headline earnings figures in the "After" column
are based on the assumption that the acquisition took place on
1 March 2009, after taking into account the following
adjustments:
- a loss of interest for six months at a rate of 8% per
annum earned on cash;
- a company tax rate of 28%.
(3) The net asset value and net tangible asset value figures in the
"After" column are based on the following assumptions:
- the acquisition took place on 31 August 2009;
- the cash payment of R3 million due on the effective date
was made and allocated to intangibles assets;
- the balance of the purchase price was not taken into
account due to the contingent nature thereof.
6. Conditions precedent
There are no outstanding conditions precedent to the acquisition.
7. Categorisation of the acquisition
The acquisition is categorised as a Category 2 transaction in terms
of the JSE Limited Listings Requirements for companies on the
Alternative Exchange board.
8. Withdrawal of cautionary announcement
Shareholders are referred to the cautionary announcement published
on SENS on 26 October 2009. By virtue of the conclusion of the
acquisition on the terms referred to in this announcement, caution
is no longer required to be exercised by shareholders when dealing
in their Silverbridge shares.
Johannesburg
7 December 2009
Designated Advisor: Sasfin Capital
(A division of Sasfin Bank Limited)
Corporate finance advisors to Graytech : Cynergy Corporate Finance
Legal Advisors to SilverBridge: Gildenhuys Lessing Malatji
Date: 08/12/2009 07:05:02 Produced by the JSE SENS Department.
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