| Wed 7 Apr 2010, 8:16 | | IQG - IQuad Group Limited - Specific repurchase of shares by the company |
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IQG
IQG
IQG - IQuad Group Limited - Specific repurchase of shares by the company
IQuad Group Limited
Incorporated in the Republic of South Africa
(Registration Number 2004/025177/06)
Share Code: IQG
ISIN: ZAE000101622
("IQuad" or "the Company")
SPECIFIC REPURCHASE OF SHARES BY THE COMPANY
1. INTRODUCTION
Shareholders are referred to the SENS announcement of 31 January 2008,
wherein it was announced that IQuad had entered into a Subscription and
Sale Agreement ("Subscription and Sale Agreement") with Enterprise
Survival Solutions (Pty) Limited ("ESS") and Messrs Dean Harding and
Wayne van der Poll ("the ESS Vendors"), whereby IQuad acquired a 60%
shareholding in ESS, for a purchase consideration of R7 800 000, which
purchase consideration was discharged in a combination of cash and IQuad
shares.
Shareholder are also referred to the SENS announcement of 5 March 2010,
wherein it was announced that IQuad had entered into an agreement to
dispose of its interest in ESS, back to the ESS Vendors, with effect from
1 December 2009.
As part of the Subscription and Sale Agreement, the ESS vendors warranted
the consolidated audited normalised profits after tax of ESS for the
financial years ending 28 February 2009 to 28 February 2011 ("ESS
warranties").
As security for the fulfilment of the ESS warranties, the ESS vendors
provided IQuad with bank guarantees to the combined value of R2 660 000
and pledged the 512 820 IQuad shares transferred to the ESS vendors in
terms of the Subscription and Sale Agreement ("initial IQuad shares"),
dividends earned thereon and interest earned on such dividends during the
warrantee period, to IQuad, which shares and cash are currently held in
an electronic cession account ("pledged assets").
In addition, the ESS vendors were allowed to utilise dividends received
on the initial IQuad shares to purchase an additional 84 400 IQuad shares
during the warranty period ("additional IQuad shares"), which also form
part of the pledged assets. Dividends amounting to R289 793 were paid on
the initial IQuad shares from 1 March 2008 until today, of which the ESS
vendors utilised R241 249 to acquire the additional IQuad shares at an
average price of R2.86, increasing their total shareholding to 597 220
IQuad shares. In addition, dividends and interest in the amount of R53
751 accrued to the ESS vendors and was not utilised to purchase further
IQuad shares.
The profit warranties provided by the ESS vendors have not been fulfilled
and IQuad has therefore exercised its right to call on the bank
guarantees and the pledged assets, which includes the specific repurchase
of the 597 220 IQuad shares, from the ESS vendors, at no consideration
("the specific repurchase").
2. TERMS OF THE SPECIFIC REPURCHASE
2.1 The specific repurchase will be undertaken for no consideration;
2.2 The specific repurchase is subject to shareholder approval;
2.3 The 597 220 IQuad shares, subject to the specific repurchase, will
be acquired by IQuad Treasury Solutions (Pty) Limited, a wholly
owned subsidiary of IQuad, and will therefore be held as treasury
shares.
2.4 The 597 220 IQuad shares, subject to the specific repurchase,
represent 2.1% of the number of IQuad shares in issue prior to the
specific repurchase.
2.5 The specific repurchase will not be effected during a prohibited
period as defined in paragraphs 3.69 and 3.70 of the Listings
Requirements.
2.6 In terms of the Listings Requirements, IQuad must pursue the
specific repurchase unless the JSE agrees otherwise.
2.7 The ESS vendors are related parties to IQuad in that they are both
directors of a company that that was a subsidiary of IQuad in the 12
months preceding the date of the specific repurchase; and
2.8 The effective date of the specific repurchase will be on or about
Monday, 31 May 2010.
3. PRO FORMA FINANCIAL EFFECTS
Set out below are the unaudited pro forma financial effects of the
specific repurchase. The specific repurchase is a direct consequence of
IQuad exercising its rights in terms of the ESS warranties, and therefore
the ESS warranties form part of the pro forma financial effects. The pro
forma financial effects are based on the unaudited interim results of
IQuad for the period ended 31 August 2009. The directors of IQuad are
responsible for the preparation of the unaudited pro forma financial
effects.
The pro forma financial effects are presented for illustrative purposes only
and, because of their nature, may not fairly present the Company`s financial
position nor the effect on future earnings after the exercise of same.
Unaudited Pro Forma Change
Before After
(cents) (cents) (%)
Basic earnings per 16,7 17,0 1.8
share1,5,6
Headline earnings per 16,8 17,1 1.8
share1,5,6
Net asset value per 470,8 471,1 0,1
share 2,3,4
Net tangible asset 116,7 128,1 9,8
value per share 2,3,4
Weighted average 27 979 333 27 382 113 (2,1)
number of shares
Number of shares in 27 979 333 27 382 113 (2,1)
issue
Notes and assumptions:
1. The basic earnings per share and headline earnings per share figures
in the "After" column have been calculated on the basis that the ESS
warranties, including the specific repurchase, were exercised on 1
March 2009.
2. The net asset value per share and the tangible net asset value per
share figures in the "After" column have been calculated on the
basis that the ESS warranties, including the specific repurchase,
were effected on 31 August 2009.
3. Goodwill of R5 251 000, initially raised at acquisition in terms of
IFRS 3, has been entirely reversed as a result of the adjustment to
the ESS purchase consideration.
4. The specific repurchase will be done for no consideration. However
for accounting purposes, the specific repurchase of the initial
shares (512 820) will be accounted for at R5,20 per share and the
additional shares (84 400) will be accounted for at R2,86 per share.
5. It is assumed that the cash saving effect of exercising the ESS
warranties was applied to reduce current commitments. An assumed
interest saving was calculated at 11.7%, based on the average rate
charged on IQuad`s overdraft facilities from time to time.
6. Taxation is calculated at 28% and transaction costs have been
assumed to be of a capital nature and therefore not tax deductable.
7. CIRCULAR AND NOTICE OF GENERAL MEETING
A circular containing full information on the specific repurchase and
also incorporating a notice of general meeting will be sent to
shareholders on or about Friday, 16 April 2010. The required resolutions
authorising the specific repurchase will be tabled at the general meeting
of shareholders that will be held on Monday, 10 May 2010 at 10:00 at the
registered offices of IQuad, 56 Mangold Street, Newton Park, Port
Elizabeth 6045.
7 April 2010
Designated Advisor
PSG Capital (Pty) Limited
Date: 07/04/2010 08:16:38 Produced by the JSE SENS Department.
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