| Thu 2 Jun 2005, 16:41 | | Tisec - Audited results; Proposed acquisition and |
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Tisec - Audited results; Proposed acquisition and Withdrawal of cautionary
TISEC LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1997/010036/06)
Share code TSC & ISIN ZAE000018131
(`Tisec` or `the company`)
AUDITED RESULTS FOR THE YEAR ENDED 31 MARCH 2005 AND THE ANNOUNCEMENT OF THE
PROPOSED ACQUISITION OF THE FSK GROUP AND WITHDRAWAL OF CAUTIONARY
SUMMARISED GROUP INCOME STATEMENT
Twelve Twelve
months months
ended ended
31 March 31 March
2005 2004
(Audited) (Audited)
R`000 R`000
Turnover 103 389
Operating loss before (867) (1 027)
interest, taxes,
depreciation and
amortisation (EBITDA)
Net interest received (3) 76
Depreciation - (30)
Operating loss (870) (981)
Exceptional items 642 (1 628)
Loss before taxation (228) (2 609)
Taxation - -
Share of associate company (88) (354)
losses
Loss attributable to (316) (2 963)
shareholders
Headline loss per share (0,7) (1,0)
(cents)
Loss per share (cents) (0,2) (2,2)
Shares in issue (000`s) 133 315 133 315
Shares in issue - weighted 133 315 133 315
average (000`s)
Headline loss
reconciliation
Loss attributable to (316) (2 963)
shareholders
Doubtful debt (1 642) 1 628
(recoverable)/provided on
disposal of associate
Loss on write down of 1 000 -
investment
Headline loss (958) (1 335)
SUMMARISED GROUP BALANCE SHEET
31 31 March
March 2004
2005 (Audited)
(Audite R`000
d)
R`000
Non current assets - 1 986
Investments - 1 986
Current assets 415 400
Cash resources - 39
Other current assets 415 361
Total assets 415 2 386
Capital and reserves
Shareholders` funds and 95 95
convertible loans
Non-current liabilities
Long-term liabilities 72 2 088
Current liabilities 248 203
Accounts payable 236 203
Bank Overdraft 12 -
Total equity and 415 2 386
liabilities
Tangible Net Asset Value 0,07 0,07
per Share (cents)
SUMMARISED GROUP CASHFLOW STATEMENT
Twelve Twelve
months months
ended ended
31 March 31 March
2005 2004
(Audited) (Audited)
R`000 R`000
(979) (541)
Cash flows from operating
activities
Cash retained from 2 628 (1 219)
investing activities
Cash flows from financing (1 700) 609
activities
Net movements in cash (51) (1 151)
balances
39 1 190
Cash at beginning of period
Cash at end of period (12) 39
STATEMENT OF CHANGES IN SHAREHOLDERS EQUITY
Share Share Distributable
Capital Premium Reserve Total
R`000 R`000 R`000 R`000
Balance at 01/04/2004 13 314 13 430 (27 436) (692)
Convertible loan
equity at 01/04/2004 - 787 - 787
Loss attributable to - - (316) (316)
shareholders
Convertible loan - 316 - 316
equity
Balance at 31/03/2005 13 314 14 533 (27 752) 95
NOTES TO THE GROUP FINANCIAL STATEMENTS
ACCOUNTING POLICIES AND AUDIT OPINIONS
The financial statements of the group comply in all material respects with South
African Statements of Generally Accepted Accounting Practice and are consistent
with those applied in the previous financial year.
The auditors, Moores Rowland, have issued an unqualified audit opinion on the 31
March 2005 annual statements and the summarised financial results contained
therein. Their report is available for inspection upon request.
GROUP RESULTS
Tisec`s results reflect an operating loss of R 870 000 and loss attributable to
shareholders of R 316 000. Loss per share is 0.2 cents and headline loss per
share is 0.7 cents.
LONG TERM LIABILITIES
The above loan creditor has deferred its right to claim or accept payment of its
loan in the sum of R 316 000 owing to it by the company until the company`s
assets fairly valued exceed its liabilities.
EXCEPTIONAL ITEM
The disposal of Tesec`s claims against IDE Securities (Pty) Ltd (`IDE`) resulted
in the recovery of a doubtful debt previously provided in the sum of R1 642 000.
An exceptional loss of R1 000 000 arose as a result of the final write down of
investments.
DIVIDENDS
No dividend was declared or proposed during the period under review.
APPROVAL BY DIRECTORS
The Directors of Tisec Limited have approved the results for the period ended 31
March 2005.
ACQUISITION ANNOUNCEMENT AND WITHDRAWAL OF CAUTIONARY
- ACQUISITION BY TISEC OF THE ENTIRE ISSUED SHARE CAPITAL OF THE FSK
ELECTRONICS GROUP;
- RESTRUCTURING OF THE SHARE CAPITAL OF TISEC;
- CHANGE OF NAME OF TISEC TO AMALGAMATED ELECTRONIC CORPORATION LIMITED
(`AMECOR`);
- CHANGE OF CONTROL OF TISEC;
- RECONSTITUTION OF THE BOARD OF DIRECTORS OF TISEC;
- TRANSFER OF THE LISTING OF THE COMPANY FROM THE `SPECIALITY AND OTHER
FINANCE` SECTOR OF THE JSE SECURITIES EXCHANGE SOUTH AFRICA TO THE
`ELECTRONIC AND ELECTRICAL EQUIPMENT` SECTOR; AND
- WITHDRAWAL OF CAUTIONARY
INTRODUCTION
Further to the cautionary announcement of the company dated 3 May 2005, Imara
Corporate Finance South Africa (Pty) Ltd (`Imara`), is authorised to announce
that an agreement (`the agreement`) dated 30 May 2005 has been concluded between
Acquired Finance (Pty) Ltd (`AQF` or `the seller`) and Tisec, in terms of which
Tisec will acquire from the seller the entire issued share capital of the FSK
Group in consideration for the issue of Tisec shares at an aggregate issue price
of a maximum of R50 250 000 (`the acquisition`).
The purpose of this announcement is to inform Tisec shareholders of the terms
and conditions of the acquisition as well as various related transactions and
corporate actions (all the transactions and corporate actions contemplated in
this announcement hereafter, collectively, referred to as `the transactions`).
RESTRUCTURING OF THE SHARE CAPITAL OF THE COMPANY
It is proposed to consolidate the company`s authorized and issued share capital
on the basis of 1-for-10 resulting in 13 314 561 issued ordinary shares and
thereafter to increase the authorized share capital to enable the issue of
shares in respect of the acquisition.
3. ACQUISITION BY TISEC OF THE FSK GROUP (`FSK`)
FSK
FSK was founded in 1991. FSK`s principal business consists of the design,
manufacture and supply of electronic equipment, technologies and solutions to
the security industry. The FSK group consists of:
- FSK Electronics SA (Pty) Limited;
- Greater Gauteng Alarm Network (Pty) Limited;
- Sabre Radio Networks (Pty) Limited;
- Sabre Networks (Pty) Limited; and
- FSK Alarmnet Close Corporation (to be converted into a company).
FSK`s principal products are:
- Digital long range radio transmitters;
- Computerised base stations, transmitters and intelligent data repeaters;
- High speed data radio networks;
- Guard monitoring units;
- Radio panic systems; and
- FSK also owns and operates licensed data radio networks throughout South
Africa.
3.2 Rationale for the Acquisition
The reverse listing of FSK into Tisec will give the shareholders of Tisec the
opportunity to participate in the growth prospects of a sound enterprise in the
security, technology and electronics field. In addition, the listing will afford
FSK the opportunity to raise its business profile and provide a platform for
Amecor to pursue other strategic acquisitions synergistic with FSK with special
emphasis on manufacturing, distribution and electronic technology entities.
Salient Terms and Conditions of the Acquisition
Subject to the fulfillment of the suspensive conditions set out in 12 below
(`the suspensive conditions`) Tisec will acquire from the seller, with effect
from 1 April 2005, all the shares in the FSK group.
The purchase price payable by Tisec to the seller is a minimum of R45 000 000,
payable by the issue of 54 000 000 consolidated ordinary shares in Tisec at
83,33 cents per share and, subject to the achievement of certain profit
warranties up to a further 5 250 000 ordinary Tisec shares at an issue price of
100 cents per share.
Messrs Rabie van der Merwe and Keith Vieira, Executive Directors of FSK will
enter into service contracts with the company and, for no additional
consideration, provide restraints of trade in favour of the company.
The terms of the acquisition include normal warranties as would ordinarily be
required in a transaction of this nature, taking into account that Tisec has
already conducted due diligence investigations into FSK`s business affairs and
activities.
4.CHANGE OF CONTROL
4.1 Upon completion of the acquisition, AQF will hold at least 80% of the issued
share capital of Tisec. AQF, together with its concert parties, will hold at
least 89% of Tisec. In terms of the Securities Regulation Code on Takeovers and
Mergers and the Rules of the Securities Regulation Panel (`the SRP`), more than
35% of the company`s issued shares will, on completion of the acquisition, vest
in the seller. This will constitute a change of control of the company and an
`affected transaction`.
The sellers of the FSK group wish to achieve a listing for the FSK group.
Accordingly it is a suspensive condition of the proposed transaction that the
Tisec shareholders (excluding Messrs Alexander and Courtney and persons acting
in concert with them), pass a resolution to waive their right to a mandatory
offer of 83,33 cents per consolidated share subject to the consent of the SRP to
this proposal.
Imara has on behalf of Tisec applied to the SRP for such consent.
5.APPROVAL OF THE ACQUISITION
As the acquisition will be classified as both a related party transaction (in
view of Messrs Courtney and Alexander being both directors of Tisec and of the
seller of the FSK group) and a Category 1 acquisition in terms of the JSE`s
Listings Requirements, the transaction requires approval in a general meeting by
Tisec shareholders who are not related parties (including associates).
In addition, the Tisec independent board (excluding Messrs Dereck Alexander and
Stephen Courtney) is required to obtain an opinion from an independent
professional expert acceptable to the JSE as to the fairness and reasonableness
of the terms and conditions of the acquisition. The opinion of the expert will
be published in the circular to Tisec shareholders, to be issued in due course
subject to the consent of the JSE.
6. CHANGE OF NAME
To better reflect the changed nature and profile of the company`s business and
corporate identity after the implementation of the acquisition, it is proposed
that Tisec changes its name to `Amalgamated Electronic Corporation Limited`
which name has been reserved and approved by the Registrar of Companies. It is
proposed that Tisec`s short name be changed to Amecor, which short name has been
reserved and approved by the Registrar of Companies.
7. SPECIFIC ISSUE OF SHARES FOR CASH
It is proposed that Tisec raise an amount of R2 000 000 by way of a specific
issue of Tisec shares for cash. Such amount will be used to defray costs
arising from the transactions.
8. RECONSTITUTION OF THE BOARD OF DIRECTORS OF TISEC
It is proposed that, upon fulfillment of the suspensive conditions, the board of
directors of the company will be reconstituted to reflect the changed nature of
the business and new controlling shareholders.
9.FINANCIAL EFFECTS OF THE ACQUISITION
Set out in the table below are the pro-forma financial effects of the
acquisition based on Tisec`s published final results for the twelve months ended
31 March 2005 and the FSK group`s audited results for the 12 months ended 28
February 2005. The pro forma financial effects have been prepared only to
provide information of how the acquisition may have impacted on the results and
financial position of Tisec. Because of their nature, the pro forma financial
effects may not give a fair reflection of Tisec`s financial position after the
acquisition or the effect on future earnings.
Before the After the Percentage
acquisition acquisition increase
(Note 1) (Notes 2 and
3)
Earnings/(loss) per share (2.4) 11.4 580
(cents)
Headline /(loss) earnings (7.2) 10.7 249
per share (cents)
Net asset value per share 0.7 65.4 9 060
(cents)
Net tangible asset value 0.7 7.2 911
per share (cents)
Notes:
Extracted from the published audited results of Tisec for the twelve months
ended 31 March 2005.
Earnings and headline earnings per share in the `after the acquisition` columns
have been based on the following assumptions:
- The acquisition was effective from 1 April 2004;
- The weighted average number of shares in issue before and after was 13 314
561 (after consolidation) and 67 331 465 respectively;
- An effective tax rate of 30% has been applied.
Net asset value and net tangible asset value per share in the `after the
acquisition` columns have been based on the following assumptions:
- The acquisition was effective 1 April 2004;
- The number of shares in issue at 1 April 2005 was 13 314 561 (after
consolidation) before the acquisition and 67 331 465 after the acquisition.
- The difference between net tangible assets and the purchase price has been
attributed to intangible assets consisting of licenses, patents and
goodwill.
The pricing of the transaction ensures that there is no asset value dilution to
Tisec shareholders. The earnings and headline earnings per share numbers are
provided for illustrative purposes only and are not considered to be relevant
for the purposes of the comparison.
10.GENERAL MEETING OF TISEC SHAREHOLDERS
A general meeting of Tisec shareholders will be convened (`the general meeting`)
for the purposes of considering and, if deemed fit, passing the necessary
ordinary and special resolutions to:
- approve the acquisition;
- waive the right of shareholders to receive an offer in terms of the SRP
regulations;
- approve and implement the consolidation and conversion to shares at no par
value;
- increase Tisec`s authorised share capital;
- approve and authorise the cash issue as a specific issue of shares for
cash; and
- change the company`s name to Amalgamated Electronic Corporation Limited
(short name Amecor).
Tisec shareholders, who are entitled and considered to be `independent unrelated
parties` holding 51,1% of Tisec`s currently issued share capital have
irrevocably undertaken to vote all their Tisec shares in favour of the
resolutions to be proposed at the general meeting to approve the acquisition and
to waive their right to receive an offer.
LISTING ON THE JSE SECURITIES EXCHANGE SOUTH AFRICA (`JSE`)
Application will be made to the JSE:
- for the transfer of the listing of Tisec in the `Speciality and Other
Finance` sector to the `Electronic and Electrical Equipment` sector of the
JSE lists with effect from a date immediately after the effective date;
and
- for the listing of the consideration shares and the cash issue shares with
effect from a date immediately after the effective date.
SUSPENSIVE CONDITIONS
The implementation of each of the transactions is subject to:
- the agreement becoming unconditional and being implemented;
- Such approvals as may be necessary being obtained from the SRP and the JSE;
- The JSE granting listings for the consideration shares and the cash issue
shares; and
- Such ordinary and special resolutions as are required for the
implementation of each of the transactions being duly passed at the general
meeting and the special resolutions being registered by the Registrar of
Companies.
CIRCULAR TO TISEC SHAREHOLDERS
A circular containing details of the transactions incorporating a notice of the
general meeting and revised listing particulars of Tisec is being prepared and
will, subject to JSE and SRP approvals, be posted to Tisec shareholders in due
course.
WITHDRAWAL OF CAUTIONARY
In terms of the Listings Requirements of the JSE, the acquisition is viewed as a
`reverse take-over` and consequently Tisec is required to prepare a Category 1
circular inclusive of listing particulars as though Tisec is a new applicant.
As required by the Listings Requirements, Tisec shareholders are warned that it
is uncertain, at this stage, whether or not the JSE will allow the Tisec listing
to continue following implementation of the acquisition.
Shareholders are advised that the cautionary notice of 3 May 2005 regarding
dealing in their Tisec shares is hereby withdrawn.
By order of the board
K A Colley
Secretary
Johannesburg
02 June 2005
Sponsor
Imara Corporate Finance South Africa (Pty) Ltd
Legal adviser
HR Levin Attorneys
Independent adviser to shareholders
Horwath Leveton Boner
Auditors
Moores Rowland
Transfer secretaries
Ultra Registrars
Date: 02/06/2005 04:10:44 PM
