| Fri 12 Aug 2005, 18:03 | | DataPro Group - Acquisition Of Atlantic |
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Datapro Group - Acquisition Of Atlantic And Withdrawal Of Cautionary
DATAPRO GROUP LIMITED
(Formerly Casey Investment Holdings Limited)
(Incorporated in the Republic of South Africa)
(Registration number 1998/016433/06)
Share code: DTP ISIN: ZAE000058061
(`DataPro Group` or `the company`)
ACQUISITION OF ATLANTIC INTERNET SERVICES (PROPRIETARY) LIMITED (`Atlantic`) AND
WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT
Introduction
The directors are pleased to announce the acquisition of 100% of the ordinary
shares in and claims against Atlantic from Cornelius Ignatius Fourie (`the
Vendor`), for a purchase consideration to be settled by the issue of 85 388 994
Vendor shares (`Vendor shares`), with effect from 01 September 2005 to be placed
primarily with third parties at a price of 52.7 cents per share, being an
approximate discount of 10% to the 30 day weighted average price of DataPro. Of
the Vendor shares, 14 231 499 shares will be retained by the Vendor for a
minimum period of 2 years, with the balance being placed on behalf of the Vendor
primarily with Black Empowerment companies, institutions and members and
associates of DataPro Group. The transaction is subject to the successful
placing of the Vendor shares on or before 31 August 2005. Shareholders are
referred to the paragraph on the Vendor placing below.
Rationale for the acquisition
The rationale for the acquisition of Atlantic is to take advantage of the
synergies between Atlantic and DataPro Group, to grow the annuity based business
of the group going forward as well as the opportunities for cross selling into
the respective customer bases.
In summary, the acquisition provides DataPro Group with:
- technical expertise;
- a large regional footprint in a sector in which DataPro Group is not
currently represented;
- a well run platform to organically and acquisitively grow consumer ISP
products and services;
- a distribution channel of over 135 Channel Partners selling additional
DataPro products and services;
- revenue sharing opportunities with other telecommunication companies;
- migration opportunities in moving dial-up consumers to ADSL and Wireless;
- an increased ADSL base of 5000 customers making it the third largest ADSL
provider;
- improved economies of scale;
- improved purchasing power;
- consolidation of the telecommunications market and therefore increased
telecommunications market share.
DataPro Group has not, as yet, penetrated the consumer market and the Atlantic
transaction is seen as a significant growth area for future VOIP (Voice over
Internet Protocol) products and services. Atlantic on the other hand, has not
penetrated the corporate market, an area of focus to DataPro Group, especially
at the SME end of the market. Through Atlantic`s existing business and as an
independent, black empowered Internet Service Provider (`ISP`), potential
expansion by DataPro Group into this customer base is substantial.
Atlantic is the largest independent consumer ISP in South Africa with a customer
base of over 32 000 users. It is the intention of DataPro Group to retain the
@lantic brand and as such the business will continue to trade independently.
The acquisition provides immediate bandwidth synergies contributing to the
economies of scale and bulk bandwidth purchasing power of DataPro Group.
Atlantic is a well run business, generating a revenue stream of around R3.2
million per month and has a distribution channel of over 135 franchisees as well
as 500 dealers around the country. The acquisition provides access to this
channel and allows DataPro Group to promote its products and solutions offerings
to this segment of the market.
Financial effects of the acquisition and the issue of shares
The financial effects of the acquisition and the issue of shares on the
published financial information of DataPro Group, as though the acquisition had
been in effect for the period under review, on earnings for the six months ended
28 February 2005 and on the net asset value as at 28 February 2005, is set out
below.
The financial information has been prepared for illustrative purposes only, and
because of its nature may not fairly present the company`s financial position
and results of operation.
Published Pro-forma %
28 February After Change
2005 acquisition
Earnings per share (cents) 2.0 1.9 (5%)
Headline earnings per share 2.0 1.9 (5%)
(cents)
Net asset value per share 21.2 29.8 41%
(cents)
Net tangible asset value per - 0.9 100%
share (cents)
Weighted average number of 228 980 314 369 37%
shares in issue (`000)
Shares in issue at the period 228 980 314 369 37%
end
Goodwill of approximately R42 million will arise on the acquisition.
Profit forecast
The abridged pro forma profit forecast for the year ending 31 August 2006 is set
out below.
31 Aug
2006
R`000
Revenue 214 099
Profit from operations 27 833
Finance costs 1 814
Profit before taxation 26 019
Taxation 5 218
Profit after taxation 20 801
Shares in issue 314 368
862
Earnings and headline earnings per share (cents) 6.6
The profit forecast has been compiled on a basis consistent with the accounting
policies of DataPro Group, with the exception for the accounting policy relating
to the amortisation of goodwill. Goodwill has not been amortised in the
forecast. The profit forecast has been reviewed by the company`s auditors SAB&T
Incorporated and the review report, prepared in accordance with guidelines laid
down by the South African Institute of Chartered Accountants, is available for
inspection at the registered office of the company.
Vendor placement
DataPro have agreed to assist the Vendor in the placement of the balance of the
Vendor shares, namely 71 157 495 new shares at a price of 52.7 cents. An
information memorandum is available at the company`s business and registered
office for interested parties.
Vendor placement opens Monday, 15 August 2005
Vendor placement closes Friday, 26 August 2005
Listing of new securities at Wednesday, 31 August 2005
commencement of business on
Put and call option
With regard to the 14 231 499 shares retained by the Vendor, the company has
signed a separate agreement whereby, subject to the 90 day weighted average
share price of DataPro Group as at 31 August 2007 being below 52.7 cents, the
Vendor has a European Put Option exercisable on 31 August 2007, whereby he has
the right to return such shares to DataPro in exchange for 16.66% of Atlantic.
Conversely, DataPro has an American call option, exercisable on or before 31
August 2007, to repurchase the 14 231 499 shares at a purchase price of R7 499
999.97, being 52.7 cents per share. This agreement requires approval of DataPro
Group shareholders in general meeting and a circular will be forwarded to
shareholders in due course. In the event that DataPro Group shareholders do not
approve the potential repurchase of shares in terms of this agreement, the
agreement provides for DG Reed and JC Herbst, executive directors, to purchase
the shares at the same price.
Withdrawal of cautionary announcement
As a result of the above, the cautionary announcement is now withdrawn.
In accordance with AltX Listings Requirements, shareholders are advised of the
risks of investing in a company listed on AltX and are advised that the JSE does
not guarantee the viability or the success of a company listed on AltX. In
terms of JSE Listings Requirements a Designated Adviser has to be retained by
the company. The Designated Adviser is required to, inter alia, attend all
board meetings held by the company to ensure that all JSE Listings Requirements
and applicable regulations are complied with, approve the financial director of
the company and guide the company in a competent, professional and impartial
manner. If the company fails to retain a Designated Adviser it must make
arrangements to appoint a new Designated Adviser within 10 business days,
failing which the company faces suspension of trading of its securities. If a
Designated Adviser is not appointed within 30 days of its suspension the company
faces the termination of its listing without an offer to minorities.
Johannesburg
12 August 2005
Company Secretary Designated Advisor
Arcay Client Support (Proprietary) Limited Arcay Corporate Services
Registration number 1998/025284/07
Date: 12/08/2005 05:58:33 PM
Produced by the JSE SENS Department
