| Tue 29 Mar 2005, 8:19 | | Acquisition: 51% of Waymark Consulting |
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Xantium - Acquisition: 51% of Waymark Consulting (Proprietary) Limited and
cautionary announcement
Xantium Technology Holdings Limited
(formerly Fastpulse Trading 568 (Proprietary) Limited)
(incorporated in the Republic of South Africa)
(Registration No. 2003/012583/06)
Share code: XAN ISIN code: ZAE000057386
(`Xantium` or `the company`)
Warning: The listing of the ordinary shares in the company is on the ALTX.
Shareholders are advised of the risks of investing in a company listed on the
ALTX. Shareholders are advised that the JSE does not guarantee the viability or
the success of a company listed on the ALTX. In terms of the JSE Listings
Requirements a designated advisor has to be retained by the company. The
designated advisor 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 the designated advisor it must make arrangements to
appoint a new designated advisor within 10 business days, failing which the
company faces suspension of trading of its securities. If a designated advisor
is not appointed within 30 days of its suspension the company faces the
termination of its listing without an offer to minority shareholders.
XANTIUM TECHNOLOGY HOLDINGS LIMITED - ACQUISITION: 51% OF WAYMARK CONSULTING
(PROPRIETARY) LIMITED AND CAUTIONARY ANNOUNCEMENT
INTRODUCTION
Further to the cautionary announcements dated 22 October 2004 and 9 December
2004, Java Capital (Proprietary) Limited is authorised to announce that, with
effect from 1 March 2005 (the `effective date`), Xantium has acquired 51% of the
issued shares of Waymark Consulting (Proprietary) Limited (`Waymark Consulting`)
(the `acquisition`).
NATURE AND RATIONALE FOR THE ACQUISITION
Ernst Scholtz, Andre Rabie, Christiaan Jacobsz and Johan Barwise (collectively
`the owners`) founded the company in 1997 and are the majority shareholders and
key executives engaged in the business.
Waymark Consulting provides the information technology (`IT`) market with high
level skilled consultants trained in various IT disciplines. Waymark Consulting
offers an all-inclusive approach to a customer`s IT challenge, combining its
consulting expertise with the analysis, design, development, implementation,
maintenance and support of a comprehensive business oriented IT solution taking
account of the fast changing business and technology landscape.
Waymark Consulting is a certified Oracle Business Partner with their core
service offering centred around Oracle solutions. Waymark Consulting also has
the necessary expertise to provide support solutions in Sun Solaris, Java, HTML,
.Net, OS390 and Natural Adabas.
Waymark Consulting has established itself as a company capable of delivering
turn-key solutions to the public and private sectors. Services include, inter
alia, systems management and implementation, security management and
administration, project management, system integration and product and software
evaluation.
Xantium Professional Services (`XPS`), a wholly owned subsidiary of Xantium,
deploys skilled IT consultants to assist clients to bridge the divide between
business and IT to enhance efficiencies and promote cost effectiveness.
The acquisition augments XPS` service offering by:
- enhancing its solutions, services and product offering to clients in
government and industry;
- expanding XPS` consulting capabilities with a specific focus around Oracle
technologies;
- increasing XPS` ITIL (information technology infrastructure library)
capabilities which will assist clients with IT efficiency and the cost
effective delivery of profit enhancing business systems.
BASIS OF THE ACQUISITION
The aggregate consideration for the acquisition is as follows:
- on completion, an initial payment, based on net asset value delivered, of
R1.53 million (`initial payment`) payable as to R1.071 million in cash and
R459 000 by the delivery of fully paid Xantium ordinary shares (`shares`)
at 50 cents per share; and
- thereafter, further amounts of up to R4.131 million payable in cash and
R2.754 million payable by the delivery of shares, based on agreed earn-out
formula for the years ending 28 February 2006, 2007 and 2008.
The maximum consideration is R8.415 million.
The key executives have entered into service contracts with Waymark Consulting
for a minimum period of three years from the effective date and, for no
additional consideration, have provided extensive restraint of trade
undertakings. The terms of the acquisition include warrantees as would
ordinarily be required in a transaction of this nature.
CONDITIONS TO THE ACQUISITION
The acquisition is subject to the fulfilment or waiver of the following
conditions by no later than 1 May 2005:
- the completion by Xantium of a comprehensive due diligence investigation of
Waymark Consulting; and
- approval by the board of directors of Xantium.
PRO FORMA FINANCIAL INFORMATION
The pro forma financial effects of the acquisition set out in the table below
have been prepared for illustrative purposes only to provide information on how
the acquisition may have impacted on Xantium`s results for the interim period
ended 30 November 2004 (`the interim results`). Because of their nature the pro
forma financial effects will not give a fair reflection of Xantium`s financial
position after the acquisition.
The `interim results before the acquisition` column reflect Xantium`s earnings
per share, headline earnings per share, net asset value per share and net
tangible asset value per share as published in the interim results.
The `pro forma interim results after the acquisition` column reflects the
effects of the acquisition on the earnings per share and headline earnings per
share based on the following assumptions:
- the acquisition was effective 1 June 2004;
- interest would have been incurred at a rate of 6.5% on the cash
consideration payable in terms of the initial payment;
- taxation at a rate of 30%;
- the inclusion of Waymark Consulting`s unaudited profit after normal tax for
a period of six months (`Waymark Consulting`s results`)on the assumption
that Waymark Consulting`s earnings for the financial year ended 29 February
2005 were earned evenly over the twelve month period and after adjusting
for 49% attributable to the owners;
- Xantium had a weighted average of 148.015 million shares in issue during
the period which includes shares to be delivered in terms of the initial
payment and in terms of the agreed formula based on Waymark Consulting`s
results;
The `pro forma interim results after the acquisition` net asset value per share
and net tangible asset per share are based on the following assumption:
- the acquisition was effective 30 November 2004;
- Waymark Consulting`s unaudited net asset value at 29 February 2005 after
providing for outside shareholders, the payment of the requisite cash and
the issue of shares in terms of the initial payment;
- 135.918 million shares in issue.
Interim Pro forma Change
results interim %
before the results
acquisition after the
(cents) acquisition
(cents)
Headline earnings per share 4.25 4.43 4.23
Earnings per share 3.96 4.13 4.29
Net asset value per share 14.54 14.78 1.65
Net tangible asset value per share 10.00 10.27 2.70
CAUTIONARY ANNOUNCEMENT
Shareholders are advised that the company remains in negotiations which, if
successfully concluded, may have a material effect on the price of the company`s
shares. Accordingly, shareholders are advised to exercise caution when dealing
in the company`s shares, pending further announcements.
Rosebank
29 March 2005
Designated advisor
Java Capital (Proprietary) Limited
