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Datatec Limited - Disposal By Logicalis Group Limited Of Its Interests In
Release Date: 29/03/2004 08:43:37 Code(s): DTC
DATATEC LIMITED - DISPOSAL BY LOGICALIS GROUP LIMITED OF ITS INTERESTS IN
AUSTRALIA AND NEW ZEALAND AND WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT
DATATEC LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1994/005004/06)
(Share code: DTC)
(ISIN: ZAE000017745)
("Datatec" or "the Company")
Disposal by Logicalis Group Limited of its interests in Australia and New
Zealand and withdrawal of cautionary announcement
1. Introduction
Further to the cautionary announcement dated 23 March 2004, the Board of
Directors of Datatec (the "Board") is pleased to announce that Datatec
International"s 100% subsidiary Logicalis Group Limited ("Logicalis") has
reached an agreement in terms of which Logicalis has disposed of its entire
interests in Australia and New Zealand, comprising a 100% interest in Regreb
B.V. and its subsidiaries, Logicalis Australia Pty Ltd and Logical CSI Limited
(together "Logicalis A/NZ"), to IBM A/NZ Holdings Pty Ltd and IBM New Zealand
Limited ("together IBM A/NZ") ("the disposal").
2. The Disposal
2.1 Rationale
Logicalis received an unsolicited offer for Logicalis A/NZ from IBM A/NZ. The
Board believes that the offer represents a strategic premium for Logicalis A/NZ.
Up to the time of receiving the offer, Datatec had no intention of disposing of
the business as the intention was to grow the business in Australia and New
Zealand. The disposal will result in a change in strategy for Logicalis, which
will now focus on its UK and US operations where there is considerable
experience and scope for growth.
The Board is of the opinion that the disposal will enhance shareholder value.
The total consideration represents a significant premium to the historical
investment costs.
2.2 The business of Logicalis A/NZ
Logicalis A/NZ is a provider of IT integration solutions including the design,
deployment and management of IT infrastructure to meet the needs of its
corporate and public sector customers. Logicalis A/NZ employs over 300 staff in
Australia and New Zealand and has partnerships with technology leaders such as
Cisco and IBM. At Datatec"s interim reporting date of 31 August 2003, Logicalis
A/NZ represented 26% of Logicalis" consolidated revenue and 25% of its net
assets.
2.3 Proceeds
The total proceeds to be received by Logicalis is USD66 million (including
working capital adjustments), comprising a cash consideration of USD46 million
for the equity and a repayment of intercompany loans and payables of USD20
million.
The proceeds will be used to strengthen the balance sheet of the group and for
potential acquisitions.
The effective date of the disposal is 1 March 2004 and the cash is expected to
be received during April 2004.
2.4 Financial effects
The unaudited pro-forma financial effects of the disposal on Datatec are set out
below and are based upon the published unaudited interim results for the six
months ended 31 August 2003, which have been prepared in accordance with General
Accepted Accounting Practice, as laid down by the South African Institute of
Chartered Accountants.
The unaudited pro-forma financial effects set out below do not necessarily
represent or indicate sustainable earnings or future profits of Datatec.
Accordingly, the unaudited pro forma financial effects set out below, have been
prepared for illustrative purposes only in order to show the effect of the
disposal.
USD Actual - Pro-forma- Increase Increase
Before the After the (Decrease) (Decrease)
Transaction Transaction (%)
EPS (cents) (8.06) 25.89 33.95 -
HEPS
(cents) 0.04 0.00 (0.04) (99.18%)
Fully
diluted EPS
(cents) (8.06) 25.89 33.95 -
Fully
diluted
HEPS
(cents) 0.04 0.00 (0.04) (99.18%)
NAV per
share
(cents) 240.79 283.88 43.09 17.90%
NTAV per
share
(cents) 195.09 238.48 43.39 22.24%
Actual
number of
shares in
issue (m) 138 138 - -
Weighted
average
number of
shares in
issue (m) 138 138 - -
The unaudited pro-forma financial effects of the disposal set out above are
based on the following assumptions that have been determined solely by Datatec:
- The earnings per share ("EPS"), headline EPS ("HEPS"), net tangible asset
value ("NTAV") and net asset value ("NAV") per share reflected in the "Actual -
Before the transaction" column were extracted from Datatec"s unaudited results
for the six months ended 31 August 2003.
- The effect on NAV and NTAV per share reflected in the "Pro-forma - After the
transaction" column assumes that the transaction was effective 31 August 2003.
- The effect on EPS and HEPS reflected in the "Pro-forma - After the
transaction" column assumes that the transaction was effected on 1 March 2003.
- Additional costs of USD1.4 million have been applied in the calculation of EPS
and HEPS.
- Interest on the cash consideration of USD 46 million (after deduction of the
USD 1.4 million additional costs) has been calculated at 8% (assuming a
conversion of this amount to rands) and interest on the USD 20 million has been
calculated at 1%.
- A taxation rate of 30% has been assumed.
3. CONDITIONS PRECEDENT
The implementation of the disposal is not subject to any conditions precedent.
4 CIRCULAR TO SHAREHOLDERS
A circular, providing full information on the above transaction, will be posted
to shareholders within 28 days from the date of this announcement, for
information purposes only.
5 WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT RELATING TO THE DISPOSAL
Shareholders are referred to the announcement dated 23 March 2004 comprising a
further cautionary announcement relating to the proposed listing of Westcon
Group, Inc. on NASDAQ and a cautionary announcement relating to the disposal.
The cautionary announcement relating to the disposal is hereby withdrawn.
Johannesburg
29 March 2004
Merchant Bank and Sponsor
RMB Corporate Finance
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