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Bytes Technology Group Limited - Announcement
Bytes Technology Group Limited
(Registration number 1911/003874/06)
(Incorporated in the Republic of South Africa)
Share Code: BTG ISIN : ZAE000029526
(`BTG`)
SALE OF 39.13% INTEREST IN DIGITAL HEALTHCARE SOLUTIONS (PROPRIETARY) LIMITED
(`DHS`) BY BTG TO BYTES TECHNOLOGY GROUP SOUTH AFRICA (`BTG SA`) AND THE
ACQUISITION OF A FURTHER 60.87% INTEREST IN DHS
1. Introduction
Further to the information provided in the reviewed consolidated financial
results of BTG for the year ended 28 February 2005 which were released on SENS
on Thursday 28 April 2005 and published in the press on Friday 29 April 2005,
shareholders are advised that BTG has sold its 39.13% interest in DHS to its 73%
held subsidiary BTG SA (`the restructure`) and acquired a further 60.87%
interest in DHS from Business Connexion Investments (Proprietary) Limited
(`BCX`), Network Healthcare Holdings Limited and certain of its subsidiaries
(`collectively Netcare`) and USAP No.1 Limited respectively (`the
acquisitions`). The restructure and the acquisition of the interest from BCX
was subject to the approval of the Competition authorities.
Prior to the restructure, BTG held a 39.13% interest in DHS and following the
acquisition and restructure, BTG SA will hold a 100% interest in DHS.
The total consideration for the acquisitions and restructure of R132.15 million
was settled in cash out of the group`s cash resources.
2. Nature of business of DHS
DHS delivers transaction switching services, medical practice management
applications and other informatics solutions to the healthcare industry. It is
one of the leading healthcare informatics companies in South Africa with in
excess of 9 300 customers.
3. Rationale for the acquisition
BTG is intent on increasing its participation and penetration in the healthcare
IT sector and believes that DHS represents an appropriate medium through which
this can be achieved. This in turn would be best achieved through a wholly
owned operation rather than through an associate company.
Furthermore it has become an imperative for DHS to expedite certain black
economic empowerment and transformation initiatives in order to ensure that it
is appropriately positioned as a truly South African company. The restructure,
together with the acquisitions, will facilitate these initiatives in that BTG SA
is an empowered company (with Kagiso holding a 27% equity interest), and has
made significant progress in the transformation arena, all of which can be
brought to bear in DHS.
4. Financial effects
Based on the published reviewed consolidated results of BTG for the year ended
28 February 2005, the pro forma financial effects of the acquisitions and the
restructure on BTG`s earnings, headline earnings, net asset value (`NAV`) and
net tangible asset (`NTAV`) per share are set out below. The pro forma financial
information has been prepared for illustrative purposes only and because of its
nature may not give a true picture of BTG`s financial position and results of
operations.
Per BTG ordinary share Before the After the Percentage
restructure restructure change
and and
acquisitions(1 acquisitions
) (2)
Loss (cents) (56.1) (53.7) (3) 4%
Fully diluted loss (63.8) (62.6) (3) 2%
(cents)
Headline earnings 89.7 92.1 (3) 3%
(cents)
Fully diluted headline 72.0 73.3 (3) 2%
earnings (cents)
NAV (cents) 244.5 247.4 (4) 1%
NTAV (cents) 68.4 18.0 (4) (74%)
Notes:
1. The `Before` financial information has been extracted from the published
reviewed consolidated results of BTG for the year ended 28 February 2005.
2. The `After` financial information has been based on the assumption that the
restructure and acquisitions were implemented on 1 March 2004 and that they
were effective for the year ended 28 February 2005.
3. The loss and headline earnings per share figures have been adjusted to
include 100% of the attributable profit of DHS for the year ended 28
February 2005 and a decrease in interest earned by BTG and BTG SA, at a
rate of 10% per annum, on R132.15 million of cash and cash equivalents
utilised to fund the transactions, adjusted for tax at the statutory rate.
4. Net asset value per share and net tangible asset value per share have been
further adjusted to include the goodwill arising on the acquisitions of
R86.1 million and the payment of the purchase consideration. Net tangible
asset value per share excludes the goodwill arising on the acquisition.
5. Conditions precedent
All conditions precedent pertaining to these transactions have been fulfilled
including the receipt of the required approval of the Competition authorities on
Tuesday, 26 April 2005.
6. Categorisation of the acquisition
The restructure and the acquisitions have been categorised as a Category 3
transaction in terms of section 9.5(a) of the JSE Listings Requirements.
Johannesburg
5 May 2005
Sponsor
Nedbank Capital
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