| Mon 27 Mar 2006, 17:07 | | Infowave - The Acquisition Of 63 |
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IFW
IFW
Infowave - The Acquisition Of 63,8% Of Apply It (Pty) Limited
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")
This announcement replaces the announcement released on SENS earlier today.
ANNOUNCEMENT REGARDING THE ACQUISITION OF 63,8% OF APPLY IT (PTY) LIMITED
AND WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT
This announcement appears in Zulu in Business Day and on our website
www.infowave.co.za
1. Introduction
Further to the cautionary announcement issued by InfoWave on 13 February
2006, shareholders are advised that InfoWave has acquired a loan account of
R14 million and an effective 63,8% interest in Apply IT (Pty) Limited
("ApplyIT") (collectively "the acquisition" or "the transaction") and has
effective management control.
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
KwaZulu-Natal and has a presence in Gauteng. The business turns over
approximately R6,5 million per annum of which 50% is annuity income. It has
good prospects and is well poised for growth 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) Limited ("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
earn-out becomes payable at 66 cents per Rand of turnover exceeding R9,1
million in year one and exceeding R10,9 million in year two, subject to a
combined maximum of R8,6 million. The effective date of the transaction is
1 March 2006. The transaction will be funded from InfoWave"s available cash
resources.
Key management and employee shareholders have retained their 26,2% stake in
ApplyIT. InfoWave purchased 73,8% of the shares from SA Bioproducts (Pty)
Limited and has undertaken to immediately on sell a 10% stake to two black
empowerment partners, which will result in ApplyIT being approximately 26%
black empowered.
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.
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; and
- cancellation of all suretyships issued by the seller over its investment
in 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
acquisition acquisition Change
(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: The pro forma 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 six month period ended
31 December 2005; the pro forma 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 05:07:04 PM Produced by the JSE SENS Department
