| Thu 14 Feb 2002, 0:00 | | Acquisition By Intervid Of Id Technology Group Plc |
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company")
Intervid Limited
(Incorporated in the Republic of South Africa)
(Registration number 1999/011483/06)
Share code ITV ISIN ZAE000025615
("Intervid")
Acquisition by Intervid of ID Technology Group PLC ("ID Technology" or "the
company")
1. Introduction
Further to the cautionary announcements published in the press on
22 November 2001 and 16 January 2002 respectively, Rand Merchant Bank is
authorised to announce that Intervid has, subject to the fulfilment of the
conditions precedent set out in paragraph 6, successfully concluded
negotiations for the acquisition by its wholly-owned United Kingdom ("UK")
subsidiary, Intervid UK Limited ("Intervid UK") of ID Technology, a company
registered in the UK ("the acquisition").
2. Rationale for the acquisition
The acquisition will broaden the customer and product base of Intervid UK's
operations and will enable the promotion of Intervid's own products to these
customers. Furthermore, Intervid UK's customers will benefit from the
service levels offered by ID Technology and their national service reach in
the UK.
The acquisition will significantly enhance Intervid's position in the UK and
European market, and is in line with the strategic plan to gain access to
key accounts and market share internationally.
3. Nature of the business
ID Technology operates in the electronic security market sector throughout
the UK. Services provided include the design, installation and servicing of
electronic article surveillance, closed circuit television (CCTV) and
intruder detection systems, predominantly in the retail and leisure market.
For the year to 31 December 2001, ID Technology's turnover was GBP11 394 535
with net earnings after tax of GBP446 496.
4. Salient terms of the acquisition
4.1 Intervid UK will, subject to fulfilment of the conditions precedent,
acquire the entire issued share capital of ID Technology and its
subsidiaries.
4.2 The vendors of ID Technology are Mr Tom Turner, who owns 7,5%, Mr Brian
Dunn who owns 46,25% and Mr Raymond Higgs, who owns 46,25% of the issued
share capital of ID Technology.
4.3 The purchase consideration for the shares in ID Technology will
ultimately be determined by the performance of the company up to and
including 31 December 2005 and will be calculated in terms of an agreed
formula. Accordingly, the purchase consideration will be made as follows:
* a minimum purchase consideration of GBP5 118 750 will be paid, made up as
follows:
- at the effective date, an initial payment of GBP3 500 000 ("the initial
payment"); and
- at 31 December 2002 a payment of GBP1 618 750 ("the second payment");
* should the company's earnings before interest and taxation ("EBIT") for
the period 1 January 2002 to 31 December 2002 exceed GBP1 250 000, a further
payment of GBP262 500 will be made. Should EBIT for the period 1 January
2002 to 31 December 2002 be below GBP1 250 000, the second payment will be
reduced proportionately;
* further consideration payments, calculated in terms of the agreed formula,
may be made depending on EBIT achieved up to and including 31 December 2005
("additional payments");
* the initial and second payments will be settled out of cash reserves of
Intervid; and
* it is anticipated that additional payments will be settled out of cash
generated by the company and will place no further financial obligations on
Intervid.
5. Financial effects of the acquisition
The table below sets out the effects of the acquisition on Intervid's
earnings, headline earnings, net asset value and tangible net asset value
per share, as at 30 June 2001.
Before After Increase/(Decrease)
(cents) (cents) (%)
Earnings per share 29.7 35.9 20.79
Headline earnings per share 29.9 36.41 21.49
Net asset value per share 497.67 497.67 -
Tangible net asset value per 464,83 380,95 (18.05)
share
Assumptions:
* The earnings and headline earnings per share in the Before column are
based on the audited consolidated results of Intervid for the 16-month
period ended 30 June 2001.
* The earnings and headline earnings per share in the After column are based
on the audited consolidated results of Intervid for the 16-month period
ended 30 June 2001, after the following adjustments to reflect the effects
of the acquisition:
- the inclusion of the earnings of ID Technology for a 16-month period,
extrapolated, for purposes of the pro forma financial effects, from the
audited results for the 12 months ended 31 December 2001, converted from
Pound Sterling to South African Rand at the average rate of 12.3567 for the
12-month period ending 31 December 2001; and
- the reduction in interest received by Intervid as a result of the
reduction in cash balances to reflect the initial and second payments.
* The net asset value and tangible net asset value per share in the Before
column is based on the audited figures as at 30 June 2001.
* The net asset value and tangible net asset value per share in the After
column are based on the audited figures as at 30 June 2001 adjusted to
include the audited net asset and tangible net asset values of ID Technology
as at 31 December 2001, converted from Pound Sterling to South African Rand
at the at the closing spot rate of 17.40558 on 31 December 2001.
* The Before and After net asset value and tangible net asset value per
share have been based on the actual shares in issue at 30 June 2001.
* The Before and After earnings and headline earnings per share have been
based on the weighted average shares in issue for the 16-month period ending
30 June 2001.
6. Conditions precedent
The acquisition is conditional upon, inter alia, the following:
* he passing of the necessary ordinary resolution by the requisite majority
of Intervid ordinary shareholders in general meeting relating to the
acquisition; and
* the approval of the JSE Securities Exchange South Africa and such other
regulatory approvals as may be required.
7. Documentation
A circular, containing full details of the acquisition and incorporating a
notice of general meeting of Intervid shareholders is in the course of being
prepared and will be posted to Intervid shareholders within 28 days of the
publication of this announcement.
Durban
14 February 2002
Merchant bank and sponsor Attorneys
RMB Hofmeyr
