| Mon 11 Apr 2005, 10:28 | | ACQUISITION: THE BUSINESS OF FOSTER MELLIAR |
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Xantium Technology Holdings Limited - Acquisition: The Business Of Foster
Melliar (Pty) Limited And Further 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`)
XANTIUM TECHNOLOGY HOLDINGS LIMITED - ACQUISITION: THE BUSINESS OF FOSTER
MELLIAR (PTY) LIMITED AND FURTHER CAUTIONARY ANNOUNCEMENT
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 a 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.
1. Introduction
Further to the cautionary announcement dated 29 March 2005, Java Capital
(Proprietary) Limited is authorised to announce that, with effect from 1 March
2005 (the `effective date`), Xantium has acquired the business of Foster Melliar
(Proprietary) Limited (`Foster Melliar`) as a going concern (`the acquisition`).
2. Nature and rationale for the acquisition
Foster Melliar, founded in 1991, has established itself as one of the leading
businesses in the information technology (`IT`) service management arena
(`ITSM`).
ITSM provides organisations with the core competence to successfully manage an
environment which relies on the efficient and effective use of technology.
Foster Melliar is South Africa`s leading Information Technology Infrastructure
Library (`ITIL`) training company, ITIL being the de facto standard for ITSM.
Foster Melliar has actively participated in creating significant ITSM capability
in South Africa and to organisations such as HP, Microsoft, Tivoli and Perot
Systems in the USA. Foster Melliar`s services have been utilised through sub-
Saharan Africa, the USA, South America, Australia and the UK.
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. Foster
Melliar compliments this process by providing training to XPS` clients as well
as an entree for XPS to offer related services to clients serviced by Foster
Melliar.
3. Basis of the acquisition
The aggregate consideration for the acquisition is R6.128 million, payable as
follows:
- on completion, an initial payment of R2 million (`initial payment`) payable
as to R1 million in cash and R1 million by the delivery of fully paid Xantium
ordinary shares (`shares`) at 53 cents per share based on an agreed net asset
value delivered; and
- R1 million payable in cash on the first and second anniversary of the
completion date respectively; and
- R1 million payable by delivery of shares on the first and second
anniversary of the completion date respectively, conditional on the key
executives engaged in the business (`key executives`) being in the employ of the
company at such date; and
- the balance by assumption of agreed liabilities.
Key executives have entered into service contracts 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.
4. Conditions to the acquisition
The acquisition is subject to the fulfilment of the following conditions:
- the completion by Xantium of a comprehensive due diligence investigation of
Foster Melliar, to be completed by 15 May 2005; and
- approval by the board of directors of Xantium.
5. 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 Foster Melliar`s unaudited profit after tax for a period
of six months (`Foster Melliar`s results`)on the assumption that Foster
Melliar`s earnings for the financial year ended 29 February 2005 were earned
evenly over the twelve month period;
- Xantium had a weighted average of 150.65 million shares in issue during the
period which includes shares to be delivered in terms of the initial payment and
on the assumption that the executives were employed by the company for the
interim period;
- An headline earnings adjustment for the amortisation of goodwill over a
period of five years, based on the initial payment.
The `pro forma interim results after the acquisition` net asset value per share
and net tangible asset per share are based on the following assumptions:
- the acquisition was effective 30 November 2004;
- the value of shares applicable to the initial payment;
- for purposes of net tangible asset value, the raising of goodwill of R1
million based on the difference between the initial payment and the net assets
delivered;
- 136.887 million shares in issue.
Interim results Pro forma
before the interim results
acquisition after the
acquisition Change %
(cents) (cents)
Headline earnings per share 4.25 4.49 5.6
Earnings per share 3.96 4.14 4.5
Net asset value per share 14.54 15.07 3.6
Net tangible asset value
per share 10.00 9.86 (1.4)
FURTHER 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 continue to exercise caution
when dealing in the company`s shares, pending further announcements.
Rosebank
11 April 2005
Designated advisor
Java Capital (Proprietary) Limited
Date: 11/04/2005 10:23:21 AM
Produced by the JSE SENS Department
