| Wed 13 Jul 2005, 14:02 | | UCS - Acquisition Of The Going Concern Business Of |
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UCS - Acquisition Of The Going Concern Business Of CEB By NEWCO and renewal of
Cautionary
UCS GROUP LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1993/002253/06)
JSE code: UCS
ISIN: ZAE000016150
(`UCS`)
ACQUISITION OF THE GOING CONCERN BUSINESS OF CEB MAINTENANCE (PROPRIETARY)
LIMITED (`CEB`) BY FOUR ARROWS INVESTMENTS 202 (PROPRIETARY) LIMITED (`NEWCO`),
A SUBSIDIARY OF UCS SOLUTIONS HOLDINGS (PROPRIETARY) LIMITED (`UCS SOLUTIONS`)
WHICH IS IN TURN A WHOLLY OWNED SUBSIDIARY OF UCS AND RENEWAL OF CAUTIONARY
ANNOUNCEMENT
1. Introduction
Further to the cautionary announcements dated 13 May 2005 and 30 June 2005,
shareholders are advised that UCS, UCS SOLUTIONS and NEWCO entered into an
agreement, dated 7 July 2005, with CEB to acquire, as a going concern, the
business of CEB (`the transaction`).
2. The transaction
The CEB business provides third party implementation and maintenance services to
its customers. Such services include offering contractual on-site services,
installations, implementation, per-call maintenance and depot repairs on all
point-of-sale and desktop computer equipment within the retail industry.
3. Rationale
UCS offers the widest range of software, solutions and services for the retail
and consumer markets in Southern Africa with a growing global presence.
The acquisition of UCS SOLUTIONS (previously Affinity Logic), concluded in 2003,
provided significant critical mass as a platform on which to base an increased
range of services to UCS customers. Full on-site hardware maintenance and
support was identified at that stage as an additional strategic service that UCS
should offer to its current and future customer base.
In order to adequately provide high-quality on-site maintenance and support to
the retail industry within acceptable turnaround time frames it is necessary to
have an established national infrastructure with appropriate industry expertise
and experience. This transaction will allow UCS to leverage off CEB`s
considerable infrastructure and retail industry focus. CEB has been in operation
since 1987 and is South Africa`s largest specialist point-of-sale maintainer.
The business has a turnover of approximately R130-million, has a staff
complement in excess of 530 and depots and branches throughout South Africa,
Botswana and Namibia.
4. Purchase consideration and settlement
The business of CEB will be acquired as a going concern for a consideration of R
48-million, subject to any adjustments arising in respect of warranted profits
and net working capital adjustments, and is to be settled in three cash
instalments as follows:
* R24-million on implementation date;
* Within 7 days of delivery of a profit certificate which is required to be
issued within 30 days of the expiry of each UCS financial year end in question:
- R12-million based on warranted profits for the year ending 30 September 2006
(`period 1`)
- R12-million based on warranted profits for the year ending 30 September 2007
(`period 2`).
To the extent that actual profits exceed warranted profits by more than R1-
million for period 1 and period 2, or both periods in aggregate, the purchase
consideration will be increased in accordance with an agreed methodology, but
limited to a maximum aggregate purchase consideration of R60-million. During
period 1 and period 2 existing management of CEB will remain unchanged and be in
effective control of the CEB business, subject to UCS management being involved
in the strategic direction of the business.
5. Effective date
The transaction will become effective at the close of business on 30 September
2005 subject to the successful fulfilment, or where appropriate and permissible,
the waiver of the conditions precedent set out below.
6. Conditions precedent
The transaction is conditional upon:
* UCS and UCS SOLUTIONS board approval
* Competition Commission approval
* Customers which are party to customer contracts which represent at least 90%
of the gross value of all customer contracts, agreeing in writing and signed by
them, to the cession, assignment and transfer to NEWCO of the relevant customer
contracts which they entered into with CEB prior to the effective date
* The completion by UCS of a comprehensive and detailed due diligence
investigation of the CEB business, which is satisfactory in all material
respects to UCS, provided that UCS may not withdraw from the transaction unless
a fundamental issue is found but for which it would not have acquired the CEB
business.
* The publication of the statutory notices in terms of section 34 of the
Insolvency Act.
The parties shall use their respective best endeavours so as to procure the
fulfilment of the conditions precedent by not later than 30 September 2005 or
such later date as may be agreed between the parties.
7. Financial effects
CEB is in the process of finalising the audit of its results for the financial
year ended 28 February 2005. Accordingly, the pro forma financial effects of
the transaction will be published by no later than 31 July 2005.
8. Renewal of cautionary announcement
Shareholders are advised to continue to exercise caution when dealing in their
UCS securities until such time as the financial effects of the transaction have
been published.
Johannesburg
13 July 2005
Sponsor
Barnard Jacobs Mellet Corporate Finance
(Pty) Limited
Legal adviser
Edward Nathan (Pty) Ltd
Transaction advisor to CDB
FCF Capital
Date: 13/07/2005 02:01:05 PM
Produced by the JSE SENS Department
