| Mon 3 Oct 2005, 10:49 | | Xantium: Acquisition Of The Remaining 49% Of Waym |
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Xantium: Acquisition Of The Remaining 49% Of Waymark Consulting (Proprietary)
Limited And Cautionary Announcement
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")
XANTIUM: ACQUISITION OF THE REMAINING 49% OF WAYMARK CONSULTING (PROPRIETARY)
LIMITED AND CAUTIONARY ANNOUNCEMENT
INTRODUCTION
Shareholders are referred to the announcement on 21 March 2005 regarding
Xantium"s acquisition of 51% of the issued shares ("shareholders interest") of
Waymark Consulting (Proprietary) Limited ("Waymark Consulting").
Java Capital (Proprietary) Limited is authorised to announce that, with effect
from 1 September 2005, Xantium has acquired the remaining 49% shareholders
interest (the "acquisition") from Ernst Scholtz, Andre Rabie, Christiaan
Jacobsz, Johan Barwise and EITS Holdings (Pty) Limited ("EITS") (collectively
"the owners").
NATURE OF BUSINESS
Waymark Consulting provides the Information Technology ("IT") market with high
level skilled consultants trained in various IT disciplines. Its all inclusive
approach combines its consulting expertise with the analysis, design,
development, implementation, maintenance and support of a comprehensive business
IT solution taking account of the fast changing technological landscape.
The acquisition will:
- facilitate the integration of the business into the Xantium group;
align the owners" interests with those of the balance of Xantium"s
shareholders; and
- result in the efficient and effective use of the resources within Waymark
Consulting to optimise opportunities elsewhere within the group.
BASIS OF THE ACQUISITION
- The consideration for 100% of Waymark Consulting accordingly comprises:
an initial payment made on 16 May 2005 of R1,53 million ("initial payment")
paid 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;
- on fulfilment of the condition detailed below, an amount of R1.48 million
payable as to R1 million in cash and R480 000 by the delivery of shares at
60 cents per share;
- on 31 August 2006, an amount of R5.805 million payable as to R2,75 million
in cash and R3,055 million by the delivery of shares at 65 cents per share;
- on 31 August 2007, an amount of R4.85 million payable as to R2,75 million
in cash and R2,1 million by the delivery of shares at 70 cents per share;
and
- on 31 August 2008, an amount of R5.1155 million payable as to R2,429
million in cash and R2,6865 million by the delivery of shares at 75 cents
per share.
The above represents a maximum aggregate consideration of R18,7805 million ("the
maximum consideration").
The key executives of Waymark Consulting (being the owners other then EITS) have
entered into services contracts for periods ending on 31 August 2008 and, for no
additional consideration, have provided extensive restraint of trade
undertakings. The terms of the acquisition include warranties as would
ordinarily be required in a transaction of this nature.
Payment of the maximum consideration is conditional on the key executives
continuing in the employ of Waymark Consulting at the various payment dates,
failing which there shall be adjustments to the payments outlined above.
PRO FORMA FINANCIAL INFORMATION
The pro forma financial effects of the acquisition set out in the table below
are the responsibility of the company"s directors and have been prepared for
illustrative purposes only to show how the acquisition may have affected
Xantium"s results for the year ended 31 May 2005 ("the year end results").
Because of their nature the pro forma financial effects may not fairly reflect
Xantium"s financial position after the acquisition.
Year end Pro forma Pro forma Percentage
results annualised year end change
before the results results after (%),
acquisition after the the column 4
(cents)(1) acquisition acquisition versus
of 51% of of the column 3
Waymark remaining 49%
Consulting of Waymark
(cents)(2) Consulting
("column 3") (cents)(3)
("column 4")
Headline earnings per 7.1 7.4 7.7 4.0
share
Earnings per share 7.2 7.5 7.8 4.0
Net asset value per 36.3 36.3 40.4 11.4
share
Net tangible asset (16.2) (16.2) (18.4) (13.6)
value per share
Number of shares in 150 664 153 679 161 741
issue and to be
issued (`000)
Notes:
1. The "year end results before the acquisition" column reflects 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 year end results
and incorporate the results for three months and the financial position at
31 May 2005 of 51% of Waymark Consulting acquired during the year.
2. In order to provide a basis for comparison to the acquisition of the
remaining 49% of Waymark Consulting, the "pro forma annualised results
after the acquisition of 51% of Waymark Consulting" column reflects the
effects of the acquisition of 51% of Waymark Consulting on the earnings per
share and headline earnings per share for the entire previous financial
year based on the following assumptions:
- the acquisition of 51% of Waymark Consulting was effective 1 June
2004;
- interest would have been incurred at a rate of 10.5% on the cash
consideration payable in terms of the initial payment;
- taxation at the rate of 29%;
- the inclusion of 51% of Waymark Consulting"s unaudited profit after
tax for the additional 9 month period from 1 June 2004 to 28 February
2005.
For purposes of net asset value per share and net tangible asset value per
share no pro forma adjustments have been made as Waymark Consulting was 51%
held by Xantium at year end.
3. The "pro forma year end results after the acquisition of the remaining 49%
of Waymark Consulting" column reflects the effects of the acquisition of
the remaining 49% of Waymark Consulting on the earnings per share and
headline earnings per share based on the following assumptions:
- the acquisition of the remaining 49% of Waymark Consulting was
effective 1 June 2004;
- interest would have been incurred at a rate of 10.5% on the cash -
consideration payable in terms of the initial payment;
- taxation at the rate of 29%;
- the inclusion of Waymark Consulting"s unaudited profit after tax for
the 12 month period ended 31 May 2005 after adjusting for outside
shareholders interest of R341 000 for the period 1 March 2005 to 31
May 2005 included in the year end results.
The "pro forma year end results after the acquisition of the remaining 49%
of Waymark Consulting" net asset value per share and net tangible asset
value per share are based on the following assumptions:
- the acquisition of the remaining 49% was effective 31 May 2005;
the raising of additional shareholder equity for amounts due to
vendors of R5.5 million;
- for purposes of net tangible asset value per share, the raising of
additional goodwill of R8.5 million after adjusting for the reversal
of outside shareholders interest of R1,816 million included in the
year end results; and
- 135 million shares in issue.
CONDITIONS TO THE ACQUISITION
The company is in discussions with the JSE as to whether or not the acquisition
constitutes a related party transaction. If the JSE rules that it does then the
acquisition will be subject to the approval of shareholders (excluding the
related parties) and a circular will be sent to Xantium shareholders
incorporating a fair and reasonable opinion and a notice of general meeting.
3 October 2005
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.
Designated and legal advisor
Java Capital (Proprietary) Limited
Date: 03/10/2005 10:49:17 AM Produced by the JSE SENS Department
