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IFW
IFW
Infowave - Acquisition of 63.8% of Apply IT (Pty) Ltd
Witdrawal of Cautionary
Infowave Holdings Limited
(Incorporated in the Republic of South Africa)
(Registration Number 1998/017276/06)
Share code: IFW & ISIN number: ZAE000016440
("Infowave" or "the Company")
Announcement regarding the acquisition of 63,8% of Apply IT (Pty) Ltd and
withdrawal of cautionary announcement
1. Introduction
Further to the cautionary announcement issued by InfoWave on 13 February 2006,
shareholders are advised that InfoWave has acquired a loan account and an
effective 63,8% interest in Apply IT (Pty) Ltd ("ApplyIT") (collectively "the
acquisition" or "the transaction").
2. Rationale for the acquisition and information regarding ApplyIT
ApplyIT is a niche software products and services company and the acquisition is
in line with Infowave"s stated objective to diversify through acquisitive
growth.
ApplyIT was formed in 2000. It developed specialised software to meet the needs
of the manufacturing sector, predominantly in the areas of safety, health,
environment and quality as well as planned maintenance. ApplyIT prides itself
on the quality of its products and services.
It is a Microsoft certified partner with 21 employees. It is based in KZN and
has a presence in Gauteng. The business turns over approximately R6,5m of which
50% is annuity income. It has good prospects and is well poised to break even
in the next two years. InfoWave anticipates that the business can achieve
similar operating profitability to its existing operations in this timeframe.
Prior to the transaction, SA Bioproducts (Pty) Ltd ("the seller") owned 73,8% of
the ordinary issued share capital and loan account of ApplyIT. InfoWave has
acquired its interest in ApplyIT for a R0,5 million upfront payment, with a
maximum potential balance of R8,6 million payable over the next two years,
provided ApplyIT achieves predefined revenue targets. The effective date of the
transaction is 1 March 2006.
Key management and employee shareholders have retained their 26,2% stake in
Apply IT. InfoWave purchased 73,8% of the shares from SA Bioproducts (Pty) Ltd
and has undertaken to immediately on sell a 10% stake to two Black empowerment
partners, which will result in ApplyIT being approximately 26% black owned.
There are a number of synergies between the operating entities within the
InfoWave group as well as opportunities to cross sell niche manufacturing IT
solutions across client bases. The transaction will be funded from InfoWave"s
available cash resources.
3. Categorisation of the transaction
This is a Category 3 transaction as defined in Section 9.5(a) of the Listing
Requirements of the JSE.
4. Conditions precedent
The acquisition is subject to certain conditions precedent that are considered
normal for a transaction of this nature and include:
* the seller concluding a five-year service agreement with ApplyIT;
* completion of a satisfactory due diligence investigation into ApplyIT; and
* cancellation of all suretyships issued by ApplyIT in favour of its commercial
bank.
5. Pro forma financial information
The unaudited pro forma financial effects of the transaction on InfoWave"s
earnings per share ("EPS"), headline earnings per share ("HEPS"), net asset
value ("NAV") and net tangible asset value ("NTAV") are set out below. The
financial effects have been prepared for illustrative purposes only. Because of
their nature, the pro forma financial information may not fairly present the
company"s financial position and results of operations after the acquisition.
The unaudited pro forma information is the responsibility of InfoWave"s
directors.
Before the After the Change
acquisition acquisition %
(cents) (cents)
(note 1) (note 2)
EPS (cents) 2.76 1.87 -32.3%
HEPS (cents) 2.76 1.87 -32.3%
NAV (cents) 12.28 11.96 -2.6%
NTAV (cents) 11.90 11.46 -3.7%
Notes
Note 1: Based on the published unaudited interim results of InfoWave for the
six months ended 31 August 2005
Note 2: For purposes of EPS and HEPS, illustrate the possible effects had the
acquisition been implemented on 1 July 2005 by incorporating the
unaudited earnings of ApplyIT for the 6 month period ended 31 December
2005; for purposes of NAV and NTAV, illustrate the possible effects
had the acquisition been effected on 31 December 2005 by including the
unaudited balance sheet of ApplyIT as at 31 December 2005.
6. Withdrawal of cautionary announcement
Shareholders are advised that caution is no longer required to be exercised by
shareholders when dealing in their InfoWave shares.
Durban
27 March 2006
SPONSOR
SASFIN CAPITAL
A DIVISION OF SASFIN BANK LIMITED
Date: 27/03/2006 08:00:03 AM Produced by the JSE SENS Department
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