| Tue 5 Jul 2011, 8:23 | | EOH - EOH Holdings Limited - Acquisition of TSS Managed Services |
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EOH
EOH
EOH - EOH Holdings Limited - Acquisition of TSS Managed Services
(Proprietary) Limited
Incorporated in the Republic of South Africa
(Registration number 1998/014669/06)
Share code: EOH ISIN: ZAE000071072
("EOH" or "the company")
ACQUISITION OF TSS MANAGED SERVICES (PROPRIETARY) LIMITED
1. INTRODUCTION
The board of directors of EOH ("the Board") is pleased to advise
shareholders that agreement has been reached between EOH Mthombo
(Proprietary) Limited ("EOH Mthombo"), a wholly-owned subsidiary of EOH,
and Tactical Software Systems (Proprietary) Limited ("TSS"), whereby EOH
Mthombo will acquire 100% of the entire issued share capital ("sale
shares") in and all claims ("sale claims") against TSS Managed Services
(Proprietary) Limited (``TSSMS``) from TSS ("the Acquisition").
2. THE ACQUISITION
2.1 Nature of the TSSMS business
TSSMS was established in 2000 and has over 620 employees. TSSMS
specialises in ICT Infrastructure Managed Services. These services
include end user support, server management, network management,
storage management, security management, infrastructure deployment and
end user training. With its head office located in Woodmead,
Johannesburg, and over 90 points of presence across South Africa, TSSMS
is ideally placed to provide its clients with services to manage and
maintain their ICT environment. TSSMS currently manages and supports
over 50,000 devices across South Africa.
2.2 The rationale for the Acquisition
The Board believes that the Acquisition provides EOH with further
annuity revenue, increased capacity in the area of IT infrastructure
support and will also increase EOH`s presence in the public sector.
Enhancing EOH`s transformation process and BEE credentials were major
drivers behind this Acquisition.
2.3 Purchase consideration
The purchase consideration of R130.5 million is warranted by profit
warranties of R35.0 million and R36.0 million net profit after tax in
the first warranty period (being the first financial year ending 28
February 2012) and the second warranty period (being the second
financial period ending 28 February 2013) respectively. The purchase
consideration will be settled by way of a cash consideration of R41.94
million and the issue of 5 240 238 EOH shares, valued at R88.56 million
at the effective date of the Acquisition. No specific third party
funding is required. Settlement will be effected in equal tranches
being, one third of cash and shares within 7 days of the transfer date
(ie 7 days after the fulfilment of the conditions precedent) and a
further one third each of cash and shares within 30 days of the
issuance of the auditors` certificate at the end of the first warranty
period and as soon as practicable after the second warranty period. In
the event that the profit warranties in year one and/or year two are
not met, settlement shall be pro rata to the actual net profit achieved
after tax.
2.4 Conditions precedent and effective date
All conditions precedent have been met with formalities being concluded
before 8 July 2011.
The effective date of the acquisition is 1 March 2011.
3. PRO FORMA FINANCIAL EFFECTS OF THE ACQUISITION
The table below sets out the unaudited pro forma financial effects of the
Acquisition, on EOH`s earnings per share, headline earnings per share,
net asset value per share and tangible net asset value per share.
The unaudited pro forma financial effects have been prepared to
illustrate the impact of the Acquisition on the reported financial
information of EOH for the six months ended 31 January 2011, had the
Acquisition occurred on 1 August 2010 for income statement purposes and
as at 31 January 2011 for balance sheet purposes. The unaudited pro forma
financial effects have been prepared using accounting policies that
comply with International Financial Reporting Standards and that are
consistent with those applied in the reviewed results of EOH for the six
months ended 31 January 2011 and the annual financial statements for the
year ended 31 July 2010.
The unaudited pro forma financial effects, which are the responsibility
of the directors, are provided for illustrative purposes only and,
because of their pro forma nature may not fairly present EOH`s financial
position, changes in equity, results of operations or cash flow.
Before the After the Percent
Acquisition Acquisiti age
on change
(%)
Basic earnings per share 96.4 116.2 20.5
(cents)
Headline earnings per share 96.2 116.1 20.7
(cents)
Net asset value per share 593.0 616.3 3.9
(cents)
Tangible net asset value per 19.1 14.5 (24.1)
share (cents)
Weighted average number of 72 446 77 686 7.2
shares in issue (000`s)
Notes:
1. The amounts in the "Before the Acquisition" column relate to the
reviewed results of EOH for the six months ended 31 January 2011.
2. The amounts in the "After the Acquisition" column reflect the financial
effects of the Acquisition on EOH as if it had occurred on 1 August 2010 for
income statement purposes and on 31 January 2011 for balance sheet purposes.
3. The effects on basic earnings per share and headline earnings per share
are calculated based on the assumption that the Acquisition was effected on
1 August 2010.
4. The effects on net asset value per share and tangible net asset value
per share are calculated based on the assumption that the Acquisition was
effected as at 31 January 2011.
4. CLASSIFICATION OF THE ACQUISITION
The Acquisition is classified as a Category 2 announcement in terms of
the Listings Requirements of the JSE.
5 July 2011
Sponsor
Merchantec Capital
Date: 05/07/2011 08:23:35 Produced by the JSE SENS Department.
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