| Mon 31 Jan 2005, 15:16 | | ACQUISITION OF SYNERGY COMPUTING |
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SEKUNJALO INVESTMENTS LIMITED - ACQUISITION OF SYNERGY COMPUTING (PTY) LIMITED
Sekunjalo Investments Limited
(Incorporated in the Republic of South Africa)
(Registration number 1996/006093/06)
Share code: SKJ ISIN: ZAE000017893
(`Sekunjalo` or `the company`)
ACQUISITION OF SYNERGY COMPUTING (PROPRIETARY) LIMITED (`SYNERGY`)
1. Introduction
Shareholders are advised that Sekunjalo has acquired 81.56% of the entire issued
capital of Synergy (`the acquisition`). The majority of the Synergy shares to be
acquired (88%) are held by Dale Investments Limited and JLP Properties
(Proprietary) Limited. Upon fulfilment of the conditions precedent referred to
in paragraph 6 below, the acquisition will be effective from 1 September 2004.
2. Nature of Business
Founded in 1978, Synergy is a leading South African Software solutions company
functioning in the arena of Business Intelligence (`BI`) solutions and Corporate
Performance Management. It is also one of few South African IT companies to have
successfully made the transition from servicing the pre-ERP software user market
to the current packaged ERP user market.
Synergy is well established as an end-to-end BI solutions implementer providing
fast and easy access to critical corporate data.
The company leverages Corporate Performance Management benefits from best-of-
breed products from leading global vendors including Cognos (Synergy, a Cognos
Distributor since 1980, maintains the largest installed base of Cognos customers
in Africa), Oracle, Sane Solutions and Idu Software. In doing so, Synergy has
empowered thousands of management users to make better, more informed decisions,
thereby increasing their organisation`s productivity and profitability. Synergy
has a current customer base of 350 active `Blue Chip` corporate and government
customers.
With the recent acquisition of Sunstone Business Solutions, Synergy has
reinforced its position as Southern Africa`s foremost solution provider in this
field.
With offices in Johannesburg, Cape Town and Durban, Synergy serves the needs of
customers across Africa and into select European countries. Synergy provides a
comprehensive range of professional services, including on-site project
consulting, technical support and ISETT-approved training.
3. Rationale
The acquisition of Synergy provides a further boost to Sekunjalo`s strategic
growth in its Information Technology portfolio and creates the opportunity for
closer co-operation between Synergy and Sekunjalo`s Health Systems Technologies,
for whom Synergy provides BI reporting and analysis solutions on top of their
Clinicom Patient Information System, currently installed at Groote Schuur,
Tygerberg, Red Cross and a number of other provincial hospitals in the Western
Cape.
Synergy`s solutions can be integrated into medical aid and life insurance
systems to provide strategic management reporting and analysis tailored to our
unique South African conditions. This acquisition provides possible opportunity
for co-operation with Benmed and Bonlife, also recently acquired by Sekunjalo.
Sekunjalo, as a black empowerment group, would like to position itself to
provide health care and financial solutions to the poor and emerging black
middle-class South Africans.
Synergy through its BI solutions sets the platform for informative analysis
allowing for better management in the Public Sector. Synergy`s BI solutions
offerings are considered as a critical element in Sekunjalo`s strategic focus on
providing products and services that are affordable, socially relevant and
aligned with the strategic thrust of government policy. The acquisition places
Sekunjalo in an improved position to participate as a partner in the
government`s proposed state health insurance fund.
4. Consideration
The consideration for the acquisition is R19 574 400. The consideration will be
settled through the issue of 30 114 462 Sekunjalo shares (`the consideration
shares`) at R0,65 (sixty five cents) per ordinary share.
Of the total consideration shares, approximately 30% will be issued on a pro
rata basis, upon the fulfilment of a R4m pre-tax profit warranty provided by the
vendors in respect of the financial years ending 31 August 2005 and 2006.
5. Financial effects
Based on the published results of Sekunjalo for the year ended 31 August 2004,
the pro forma financial effects of the acquisition on Sekunjalo`s earnings,
headline earnings, net asset value (`NAV`) and tangible NAV are set out below.
The pro forma financial information has been prepared for illustrative purposes
only and because its nature may not give a true picture of Sekunjalo`s financial
position and results of operations.
Per Sekunjalo Before the After the Percentage
ordinary share acquisition(1) acquisition(2) change
(cents) %
Earnings 2.52 2.86 13
Headline earnings 2.66 2.74 3
NAV 46.26 48.57 5
Tangible NAV 40.42 43.41 7
Notes:
1. Based on the audited results of Sekunjalo for the year ended 31 August 2004.
2. Based on the assumption that the acquisition, in terms of the letter of
understanding, was effected 1 September 2003 for income statement purposes, on
31 August 2004 for balance sheet purposes and assuming that Sekunjalo has paid
the consideration of R19 574 400.
3. Taking into account Sekunjalo`s effective 81.56% share of the profits
attributable to Synergy, based on Synergy`s audited results for the year ended
31 March 2004 (for purposes of calculating the pro forma financial effects, the
R4m pre-tax profit warranty has not been taken into account).
4. For the purpose of the pro forma NAV and NTAV calculation, Sekunjalo has
conservatively valued the licences, goodwill and operating systems of the
acquisition at R20 million.
5. The combined income of Health System Technologies, Synergy and SemTech is
expected to generate approximately R10m of pre-tax profits in the forthcoming
financial year.
6. Conditions precedent
The acquisition is subject to the fulfilment of, inter alia, any necessary
approvals and procedures required by the various regulating authorities.
Cape Town
31 January 2005
Sponsor
Nedbank Capital
Date: 31/01/2005 03:11:56 PM
Produced by the JSE SENS Department
