| Fri 28 Oct 2011, 7:30 | | JSC - Jasco - Acquisition by Jasco of the remaining interest in Telesciences |
|
JSC
JSC
JSC - Jasco - Acquisition by Jasco of the remaining interest in Telesciences
(Proprietary) Limited
JASCO ELECTRONICS HOLDINGS LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1987/003293/06)
Share Code: JSC & ISIN: ZAE000003794
("Jasco" or "the company")
ACQUISITION BY JASCO OF THE REMAINING INTEREST IN TELESCIENCES (PROPRIETARY)
LIMITED ("TELESCIENCES")
1. Introduction
On 1 July 2009, shareholders were advised that Jasco had acquired a 30% interest
in Maringo Communications (Pty) Limited ("Maringo") and Maringo Software
Solutions (Pty) Limited. This interest in Maringo was increased to 36,5% during
the year ended 30 June 2010.
Effective 1 January 2011, Jasco increased its effective stake in Maringo to 85%
by restructuring its shareholding in Telesciences (a wholly owned subsidiary at
the time) and Maringo (an associate company at the time) such that post the
transaction, Jasco`s shareholding in Telesciences was reduced to 85% and
Telesciences owned 100% of Maringo ("Phase 2 Maringo Transaction"). The
purchase consideration paid by Jasco to the founding shareholders of Maringo
("Maringo Vendors") was R8,4 million and was discharged by issuing to the
Maringo Vendors new shares in Telesciences for a 15% minority stake in
Telesciences. Shareholders were advised of the Phase 2 Maringo transaction as
part of the 31 December 2010 interim results that were announced on the
Securities Exchange News Service of the JSE on 23 March 2011.
Maringo Software Solutions (Pty) Ltd was excluded from Phase 2 and remains an
associate at 30%, and continues to be equity accounted.
Following on from the Phase 2 Maringo Transaction, Jasco wishes to advise
shareholders that it has concluded an agreement with the Maringo Vendors to
acquire their 15% minority stake in Telesciences ("the Acquisition") for a cash
consideration of R6,5 million ("purchase consideration").
2. Nature of Telesciences and Maringo businesses
Telesciences holds the sole and exclusive right to distribute 3M
telecommunication products into the fixed line networks. Telesciences also
sells fibre and wireless technologies in the form of products and services into
the fixed line and mobile networks. These products are mainly imported in terms
of exclusive agency agreements with foreign principals. The products are often
combined into a customised technology solution for deployment into the "last
mile" of a fixed line or wireless telecommunications network.
Maringo is a value added reseller of converged voice and data connectivity
solutions and hosted solutions sourced from a major mobile telecommunications
operator. It is specifically focused on the small corporate and SMME markets in
South and southern Africa.
3. Rationale for the Acquisition
Jasco`s recently announced strategy involves building effective scale to ensure
competitiveness and relevance.
Furthermore, focused business development and a unified brand and marketing
strategy incorporating an effective product offering to clients as well as
diversification of markets and geographies is considered as key in the company
achieving its growth goals.
To ensure a more integrated business development focus and a "one-group"
performance culture, the group was restructured into three verticals:
* Information and Communication Technology ((ICT) Solutions)
This vertical has historically been the backbone of Jasco and Spescom.
* Industry Solutions
The second vertical offers innovative solutions for industry and commerce
outside of the ICT sector.
* Energy Solutions
The third vertical includes the Jasco businesses of Special Cables and T-
Components, now combined as Jasco Electrical Manufacturers.
The acquisition of the remaining 15% stake in Telesciences fits well into
Jasco`s strategy of an integrated business. The consolidated business will
provide the ICT Solutions vertical with critical mass and wider service
offerings in line with market demands and will allow for a significant up-sale
of its connectivity solution.
4. Salient features of the Acquisition
The purchase consideration will be discharged in cash by utilising existing cash
resources, and will be settled in three tranches as follows:
* R2,500,000 payable three business days after the signing of the Agreement
or such other date as may be determined in writing by all the parties;
* R2,000,000 plus interest thereon calculated at the prime rate from 3
October 2011 (being the effective date of the Acquisition) up to and
including the date of payment thereof, on or before 3 April 2012; and
* R2,000,000 plus interest thereon calculated at the prime rate from 3
October 2011 up to and including the date of payment thereof, on or before
3 October 2012.
In addition to the purchase consideration, Telesciences will settle all claims
amounting to R2,922,626 on shareholder loan account, that the Maringo Vendors
have against Telesciences existing on the effective date ("Claims"), to be
settled as follows:
* R1 million payable three business days after the signing of the Agreement
or such other date as may be determined in writing by all the parties; and
* the balance plus interest thereon, commencing from 28 November 2011 to 28
June 2012.
These shareholder loans did not have fixed terms of repayment at 30 June 2011
and attracted interest at prime overdraft rates
5. Conditions precedent
There are no outstanding conditions to the Agreement. All conditions precedent
have been met.
6. Pro forma financial effects
The unaudited pro forma financial effects, for which the directors are
responsible, are provided for illustrative purposes only to show the effect of
the Acquisition on the earnings, headline earnings, diluted earnings and diluted
headline earnings per share as if the Acquisition had taken effect on 1 July
2010 and on the net asset value and net tangible asset value per share as if the
Acquisition had taken effect on 30 June 2011. Because of their nature, the
unaudited pro forma financial effects may not give a fair presentation of
Jasco`s financial position and performance. The unaudited pro forma financial
effects have been compiled from the audited consolidated financial statements of
Jasco for the twelve months ended 30 June 2011 and are presented in a manner
consistent with the format and accounting policies adopted by Jasco and have
been adjusted as described in the notes below.
Before the After the Change Change
Acquisition Acquisition
(Published) (Pro forma)
(1)
(cents) (cents) (cents) (%)
Earnings per 7.8 6.8 -1.0 -12.7
share(2)(3)(4)
Headline Earnings 14.0 13.0 -1.0 -7.1
per share
(2)(3)(4)
Diluted earnings 7.8 6.8 -1.0 -12.7
per share
(2)(3)(4)
Diluted headline 14.0 13.0 -1.0 -7.1
earnings per
share (2)(3)(4)
Net asset value 234.4 234.0 -0.4 -0.2
per share (5)(6)
Net tangible 156.3 151.9 -4.4 -2.8
asset value per
share (5)(6)
Shares in issue 122 745 469 122 745 469
(`000) (7)
Weighted average 122 745 469 122 745 469
number of shares
in issue (`000)
(7)
Diluted weighted 122 745 469 122 745 469
average number of
shares in issue
(`000) (7)
Notes
(1) The "Before Published" financial information has been extracted, without
adjustment, from Jasco`s published audited final results for the year ended
30 June 2011.
(2) Net earnings attributable to equity holders of the parent and non-
controlling interests have been adjusted by R782,262 (respectively) to
reflect the once-off effect on minorities share of losses in Telesciences
and Maringo during the second half of FY2011.
(3) The adjustment to interest paid represents the ongoing interest charge on
the R6,5 million purchase consideration. The after tax effect of this
adjustment calculated at 28% is R194,400.
(4) The once-off R85,000 in transaction costs has been expensed as per the
revised IFRS 3 - Business Combinations. No tax deduction is permitted.
(5) The balance sheet of Telesciences and Maringo is already consolidated at 30
June 2011. The minorities share of losses of R782,262 for the second six
months is transferred to the ordinary shareholders.
(6) Adjustments including a net bank overdraft worth R6,5 million relating to
the purchase consideration and the related effect of adjusting non-
controlling interest worth R669,000 and goodwill worth R5,831 million.
(7) The weighted average number of shares is unchanged.
7. Categorisation of the Acquisition
In terms of the Listings Requirements, transactions entered into by the company
during the 12 months prior to the date of the latest transaction, with the same
party and/or involve the acquisition of an interest in one particular company,
need to be aggregated.
Accordingly, the Acquisition is categorised as a Category 2 transaction for
purposes of the Listings Requirements of the JSE. In terms of the JSE Listings
Requirements a category 2 transaction does not require shareholder approval.
Johannesburg
28 October 2011
Sponsor:
Grindrod Bank Limited
INCORPORATING:
Jasco ICT Solutions, Jasco Industry Solutions and Jasco Energy Solutions
www.jasco.co.za
Date: 28/10/2011 07:30:01 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.
