| Tue 9 Mar 2004, 13:56 | | Announcement To Y3k Group Limited"s Shareholders A |
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Y3K Group Limited - Announcement To Y3k Group Limited"s Shareholders And
Further Cautionary
Y3K Group Limited
(Incorporated in the Republic of South Africa)
(Registration number 1998/009608/06)
Share code: YHK ISIN: ZAE00017208
ANNOUNCEMENT TO Y3K GROUP LIMITED"S SHAREHOLDERS AND FURTHER CAUTIONARY
1. INTRODUCTION
Shareholders are referred to the cautionary announcements published on 7
November 2003, 12 December 2003 and 11 February 2004.
Shareholders are advised that Y3K Security Products (Pty) Ltd ("Y3K"), a
wholly owned subsidiary of Y3K Group Limited, has entered into agreements,
subject to the conditions precedent set out below, whereby Y3K will acquire
100% of the issued share capital of Information Security Architects (Pty) Ltd
("ISA"); and iSecure (Pty) Ltd ("iSecure"), jointly referred to as "the
acquisitions".
2. THE ISA AND iSECURE ACQUISITIONS
2.1 Nature of business of ISA
ISA is a provider of information security solutions. ISA is able to
effectively design, integrate, support and manage appropriate
security solutions for a broad range of clients to meet all
business requirements, particularly that of large organisations.
ISA adopts the best of class security methodologies and integrates
these with best of breed security technologies.
2.2 Nature of business of iSecure
iSecure is an IT security services company that provides
information security solutions. iSecure services customers across a
broad spectrum of organisations in the financial, insurance,
telecommunications, mining and general business sectors.
2.3 Details of the ISA and iSecure acquisitions and purchase
consideration
With effect from 1 March 2004, Y3K will acquire 100% of the
economic interests in ISA and iSecure.
The cash purchase consideration payable for the acquisition of ISA
is R6,367,490 (six million, three hundred and sixty seven thousand,
four hundred and ninety rand) and the purchase consideration
payable for the acquisition of iSecure is R579,600 (five hundred
and seventy nine thousand, six hundred rand). In terms of the
agreement, Y3K will arrange that the purchase consideration be
settled by the issue of Y3K Group Limited shares to the vendors at
an issue price of 13,336 (thirteen comma three, three, six) cents
per share.
Y3K Group Limited has agreed to raise a loan account with Y3K in
order that the 52,092,757 (fifty two million, ninety two thousand,
seven hundred and fifty seven), new, ordinary shares can be issued
to the vendors of the companies to be acquired by Y3K.
2.4 Share options granted in terms of the purchase agreement with
iSecure
An executive director of iSecure has been offered an option to
purchase an additional 18,890,300 (eighteen million, eight hundred
and ninety thousand, three hundred) shares in Y3K Group Limited at
a price of 13,336 (thirteen comma three, three, six) cents per
share, subject to various conditions. The option must be exercised
before 1 March 2007.
2.5 Rationale for the acquisitions
For a lengthy period, Y3K Group Limited has been restructuring and
rationalising its business within the IT security sector. The
acquisitions of ISA and iSecure will broaden the group"s activities
in this sector. The enlarged group will ensure the critical mass
for consistent profitability, with budgeted turnovers expected to
be in excess of 30 million rand, a threefold increase from the
previous period.
Y3K Group Limited will now provide a comprehensive range and mix of
products to its customers. Y3K, ISA and iSecure are all information
security service providers, all specialising in particular IT
security areas. The combined businesses bring together a wealth of
technical expertise and experience for providing top-class
information security systems. The group is retaining all three
CEO"s of the respective companies, with Clifford Katz of ISA
appointed as the CEO of the enlarged organisation.
2.6 Conditions precedent to the acquisitions
The acquisitions and option are subject to the issue of fair and
reasonable opinions by independent professional experts and the
approval of shareholders at a shareholder"s meeting to be convened,
and to the extent necessary, the approval of various regulatory
bodies.
2.7 Financial effects of the acquisitions
The table below sets out the financial effects of the ISA and
iSecure acquisition based on the unaudited interim results of Y3K
Group Limited for the six months ended 31 August 2003:
Y3K Group Limited Before After Before
vs. After
(cents) (cents) Change
Basic earnings per share 0.1 1.1 1000%
Headline earnings per share 0.1 1.6 1500%
Net asset value per share 1.9 7.9 316%
Net tangible asset value per (1.8) 1.3 172%
share
Notes:
1. The "Before" column reflects the position of each Y3K Group Limited
share for the six months ended 31 August 2003 based on the total number of
52,253,374 shares in issue throughout the period.
2. The "After" column assumes that the ISA and iSecure acquisition were
implemented on 1 March 2003 and reflect the after tax effects and
consolidated value of Y3K Group Limited which would have been the results had
Y3K Group Limited interests in ISA and iSecure been included for the six
months ended 31 August 2003. The "After" column takes into account the
additional ordinary shares to be issued in terms of the proposed acquisition,
and presumes that the full share option is taken up, resulting in a fully
diluted number of shares of 123,236,431.
3. CIRCULAR TO SHAREHOLDERS AND RELATED PARTY TRANSACTION
A circular to shareholders containing full details of the acquisitions and
convening a general meeting of shareholders to vote on these acquisitions
will be posted within 28 days of this announcement. One of the acquisitions
is a related party to Y3K Group Limited, full details of this transaction
will be disclosed in the circular to shareholders.
4. FURTHER CAUTIONERY ANNOUNCEMENT
Shareholders are advised to continue to exercise caution in dealing in Y3K
Group Limited"s securities until a further announcement is made.
Sponsor
River Group
Randburg
9 March 2004
Date: 09/03/2004 01:47:42 PM Produced by the JSE SENS Department
