| Tue 1 Feb 2005, 8:32 | | THE MERGER OF MTHOMBO IT SERVICES |
|
EOH - ANNOUNCEMENT REGARDING EOH`S TRANSFORMATION TRANSACTION CONSISTING OF:
THE MERGER OF MTHOMBO IT SERVICES (`M-IT`) INTO EOH; AND
THE FORMATION OF THE EOH MTHOMBO TRUST FOR BLACK EOH AND M-IT STAFF
RESULTING IN
25% BROAD BASED BLACK OWNERSHIP OF EOH;
38% BLACK EMPLOYEE PROFILE;
A DOMINANT IT SERVICES ORGANISATION WITH STAFF WELL IN EXCESS
OF 900; AND
FOUR BLACK DIRECTORS, THREE EXECUTIVE AND NON-EXECUTIVE
CHAIRMAN.
ENTERPRISE OUTSOURCING HOLDINGS LIMITED
Incorporated in the Republic of South Africa
(Registration number 1998/014669/06)
Share code: EOH ISIN: ZAE000022026
(`EOH` or `the company`)
ANNOUNCEMENT REGARDING EOH`S TRANSFORMATION TRANSACTION
CONSISTING OF:
* THE MERGER OF MTHOMBO IT SERVICES (`M-IT`) INTO EOH; AND
* THE FORMATION OF THE EOH MTHOMBO TRUST FOR BLACK EOH AND M-IT
STAFF
RESULTING IN
* 25% BROAD BASED BLACK OWNERSHIP OF EOH;
* 38% BLACK EMPLOYEE PROFILE;
* A DOMINANT IT SERVICES ORGANISATION WITH STAFF WELL IN EXCESS
OF 900; AND
* FOUR BLACK DIRECTORS, THREE EXECUTIVE AND NON-EXECUTIVE
CHAIRMAN.
1. INTRODUCTION
Merchant Sponsors (Proprietary) Limited is authorised to announce that EOH has
finalised a Transformation Transaction whereby in excess of 25% of EOH ordinary
shares will be held by black vendors and staff. EOH will merge with black IT
company, Mthombo IT Services (Proprietary) Limited (`M-IT`), by acquiring the
shares in and claims against it and, in addition, will issue shares for cash to
the EOH Mthombo Trust (`Mthombo Trust`), collectively referred to as the
(`Transformation Transaction`).
M-IT is a leading black IT service provider focused on delivering specialist
cost effective IT infrastructure services to the corporate and public sectors. M
IT is a well established multi-vendor accredited service provider with a team of
highly qualified professionals, good long-term relationships with its customers
and a national infrastructure.
The merger will result in the introduction of black shareholders, senior
management and staff to EOH. The total staff complement of the merged
organisation will be in excess of 900, of which 38% will be black employees.
Pursuant to the merger Lucky Khumalo and Nkosinathi Khumalo, the M-IT vendors,
will be appointed to the board of directors of EOH. This will result in the EOH
board comprising four black directors including three executive directors and Dr
Nakedi Mathews Phosa as non-executive chairman.
EOH believes that the most effective way to achieve broad based empowerment is
to involve its BEE employees in the Transformation Transaction. This will be
accomplished through the creation of the Mthombo Trust. New EOH shares will be
issued to the Mthombo Trust, which will have the current and future previously
disadvantaged EOH employees as beneficiaries.
2 TERMS OF THE TRANSFORMATION TRANSACTION
In terms of the M-IT transaction, 8 million EOH shares will be issued in
addition to a cash payment of R6 million to the M-IT vendors. A further 9,18
million shares will be issued to the Mthombo Trust.
The effective date of the merger is 1 November 2004 and it contains warranties
that are normal for a transaction of this nature.
Once the Transformation Transaction is unconditional, the company will provide
the requisite written confirmation to the JSE Securities Exchange South Africa
(`the JSE`) that the articles of association of M-IT, where necessary, will be
amended to conform to the Listings Requirements of the JSE.
3 CONDITIONS PRECEDENT
The Transformation Transaction is conditional upon the following suspensive
conditions:
* EOH shareholders will be required to approve the introduction of the
company`s employees as broad based empowerment shareholders, through the
Mthombo Trust;
* approval of the merger by EOH shareholders in general meeting;
* the approval by the JSE of the listing of the new EOH ordinary shares;
* the approval by the Securities Regulation Panel (`SRP`); and
* the approval of the merger by the Competition Commission.
4. PRO FORMA FINANCIAL EFFECTS OF THE TRANSFORMATION TRANSACTION
Set out in the table below are the unaudited pro forma financial effects of the
Transformation Transaction on the audited financial results of the company for
the year ended 31 July 2004. The pro forma financial effects are provided for
illustrative purposes only, and, because of their pro forma nature, may not
fairly present EOH`s financial position, changes in equity, results of
operations or cash flows.
Before the After the
Transfor- Transfor-
mation mation Change
Transaction1 Transaction2 (%)
Earnings per share (cents)3 40,61 41,12 1,26
Headline earnings per share
(cents)3 42,84 44,86 4,72
Net asset value per share
(cents) 133,32 155,37 16,54
Net tangible net asset value
per share (cents) 83,50 64,11 (23,22)
Number of shares in issue 50 667 58 667
(000`s)
Number of shares in issue
including the Mthombo Trust 50 667 67 847
(000`s)4
Weighted average number of
shares in issue (000`s) 47 111 55 111
Notes
1. The `Before the Transformation Transaction` column is based on the audited
results of EOH for the year ended 31 July 2004.
2. The `After the Transformation Transaction` column is based on 58 667 356
shares in issue, which includes 8 million shares as part of the purchase
consideration for the shares in M-IT.
3. The calculation of earnings per share and headline earnings per share takes
into account M-IT`s audited after tax net profit of R4,85 million for the
year ended 30 June 2004, amortisation of goodwill of R1 million and a
reduction in interest received of R252 000 based on the cash consideration
paid of R6 million and an after tax interest rate of 4,2% per year.
4. The number of shares in issue including the Mthombo Trust, are reflected on
an unconsolidated basis.
5. DOCUMENTATION
A circular, which is subject to the approval of the JSE and which includes a
notice convening a general meeting of EOH ordinary shareholders, will be posted
to EOH ordinary shareholders on or about 3 March 2005.
Johannesburg
1 February 2005
Corporate advisor
Merchantec (Proprietary) Limited
Sponsor
Merchant Sponsors (Proprietary) Limited
Auditors and reporting accountants for EOH
IAPA Johannesburg (Chartered Accountants (SA))
Auditors and reporting accountants for M-IT
Nkonki Inc.
Date: 01/02/2005 07:00:13 AM
Produced by the JSE SENS Department
