| Mon 23 May 2005, 13:21 | | Acquisition Of Itq And Update |
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Xantium Technology Holdings Limited - Xantium Technology Holdings Limited -
Acquisition Of Itq And Update On The Acquisition Of The Business Of Sifikile
Procurement Services And Simeka Consulting
Xantium Technology Holdings 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 OF ITQ AND UPDATE ON THE
ACQUISITION OF THE BUSINESS OF SIFIKILE PROCUREMENT SERVICES AND SIMEKA
CONSULTING
INTRODUCTION
Further to the cautionary announcement dated 28 April 2005, Java Capital is
authorised to announce that, with effect from 1 April 2005 (the `effective
date`), Xantium has acquired 100% of ITQ (Proprietary) Limited (`ITQ`) and
Finfleet (Proprietary) Limited, by acquiring the issued shares of their holding
companies.
RATIONALE
ITQ is a specialist Oracle Development Partner providing turnkey applications
for specific customer requirements. ITQ takes responsibility for the entire
development life cycle of a solution, from design, implementation to ongoing
support.
By using the latest in Oracle technology, ITQ offers bespoke software
development and packaged fleet management and leasing solutions, business
intelligence and data warehousing services.
ITQ`s revenue model enhances Xantium`s annuity income stream and provides
Xantium with well-established relationships and long term contracts in the
private sector.
ITQ`s services span across various industries and include blue chip customers in
the healthcare, financial and transportation sectors.
In March 2005 Xantium announced the acquisition of 51% of Waymark Consulting, a
certified Oracle Business Partner. Waymark Consulting`s core business is
providing Oracle solutions to the public sector thereby complimenting the
private sector focus of ITQ.
The acquisition of ITQ and Waymark Consulting provide Xantium with the capacity
to obtain larger government and private sector contacts in the enterprise
resource planning market.
BASIS OF THE ACQUISITION
The consideration for the ITQ acquisition is as follows:
- on completion, an initial payment, based on net asset value delivered, of R9
million (`initial payment`) payable as to R6.5 million in cash and R2.5 million
in Xantium shares (`shares`) at 53 cents per share; and
- thereafter, further amounts of up to R21.5 million payable in cash and R9.5
million payable in shares, based on an agreed earn-out formula for the years
ending 31 March 2006, 2007 and 2008.
In terms of the agreed formula, the maximum number of shares to be issued, price
per tranche, value per tranche and warranted profit after tax (`PAT`) for the
requisite period is as follows:
- 31 March 2006, 5 314 286 shares issued at 70 cents per share equating to R3.72
million based on a warranted PAT of R7 million;
- 31 March 2007, 3 282 353 shares issued at 85 cents per share equating to R2.79
million based on a warranted PAT of R8.4 million; and
- 31 March 2008, 2 990 000 shares issued at 100 cents per share equating to
R2.99 million based on a warranted PAT of R10.08 million.
The maximum consideration is R40 million.
The key executives and vendors, Marc Schrader, Petro Bogatie and Stephen Bracher
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.
CONDITIONS TO THE ACQUISITION
The acquisition is subject to the fulfilment or waiver of the following
conditions no later than 26 September 2005:
- the completion by Xantium of a comprehensive due diligence investigation;
- if required by Xantium, consent of counterparties of all key business
contracts to the acquisition;
- if required, approval of the competition authorities; and
approval by the board 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 show how the acquisition
may have affected Xantium`s results for the interim period ended 30 November
2004 (`the interim results`). Because of their nature the pro forma financial
effects may not fairly reflect Xantium`s financial position after the
acquisition.
The `interim results before the acquisition` column reflect Xantium`s earnings
per share, diluted earnings per share, headline earnings per share, diluted
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, diluted earnings per
share, headline earnings per share and diluted 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% on the cash consideration
payable in terms of the initial payment;
- taxation at a rate of 30%;
- the inclusion of unaudited profit after normal tax of the companies to be
acquired for the period June 2004 to November 2004;
- for purposes of diluted earnings and diluted headline earnings per share,
Xantium had 151.8 million shares in issue during the period which includes
shares to be delivered in terms of the initial payment and calculated in terms
of the agreed formula;
- for purposes of earnings and headline earnings per share, Xantium had 139.7
million shares in issue during the period which includes shares to be delivered
in terms of the initial payment;
- no adjustment for the amortisation of goodwill arising from the acquisition.
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;
- the acquisitions unaudited net asset value at the effective date after
providing for the payment of the requisite cash and the issue of shares in terms
of the initial payment;
- 139.7 million shares in issue;
- for purposes of net tangible asset value, the raising of goodwill of R5.9
million based on the difference between the initial payment and the net assets
delivered.
Interim Pro forma Change
results interim %
before the results
acquisition after the
(cents) acquisition
(cents)
Headline earnings per share - 4.25 4.95 16.4
diluted
Earnings per share - diluted 3.96 4.66 17.6
Headline earnings per share - 4.63 5.37 15.9
issued
Earnings per share - issued 4.31 5.06 17.4
Net asset value per share 14.54 15.84 8.9
Net tangible asset value per 10.00 7.18 (28.2)
share
UPDATE ON THE ACQUISITION OF THE BUSINESS OF SIFIKILE PROCUREMENT SERVICES AND
SIMEKA CONSULTING
Shareholders are referred to the announcement published on SENS on 28 April 2005
pertaining to the acquisition of the business of Sifikile Procurement Services
and Simeka Consulting. The financial effects pertaining to this transaction are
still being prepared. Pending publication of those financial effects
shareholders should continue to exercise caution when dealing in the company`s
shares.
Rosebank
23 May 2005
Designated advisor
Java Capital (Proprietary) Limited
