| Mon 17 Jul 2006, 17:15 | | Adcorp - Disposal of Graphicor and Simeka TWS |
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ADR
ADR
Adcorp - Disposal of Graphicor and Simeka TWS
Adcorp Holdings Limited
(Incorporated in the Republic of South Africa)
(Registration number 1974/001804/06)
("Adcorp")
(Share code: ADR & ISIN: ZAE000000139
Disposal of Graphicor (Pty) Limited and Simeka TWS Communications (Pty) Limited
1. Introduction
Shareholders are advised that Adcorp has entered into an agreement to dispose of
Graphicor (Pty) Limited ("Graphicor") and Simeka TWS Communications (Pty)
Limited ("Simeka TWS") ("the transaction") which companies constitute the
Communications Division within Adcorp.
In accordance with section 10 of the JSE Limited"s Listings Requirements, the
transaction is classified as a small related party transaction.
Deloitte & Touche Corporate Finance has been requested by the board of directors
of Adcorp ("the board") to advise shareholders in terms of the small related
party transaction. Deloitte & Touche Corporate Finance has expressed the opinion
that the transaction is fair and reasonable to shareholders of Adcorp.
Their opinion will lie open for inspection for 28 days from the date of this
announcement at the registered office of Adcorp (28 On Sloane, Ground Floor,
Block A, Bryanston).
2. The disposal
Graphicor and Simeka TWS have been sold to a consortium comprising Thendo
Ratshitanga, Onkgopotse Tabane, Dharmaseela Naidoo and Mboneni Mulaudzi ("the
consortium"), with effect from 1 March 2006 ("effective date").
3. Rationale and background
The rationale for the transaction is that the Communications Division of Adcorp
is regarded as non-core to Adcorp"s main business which is staffing.
Adcorp"s management believes the chances of the consortium being successful are
good given that the individuals concerned are well connected in government
circles and that as a 100% black-owned communications business, they would have
access to business which is unavailable to an Adcorp group company. In addition
it gives Adcorp a unique opportunity to initiate an enterprise development
project as required by the Department of Trade and Industry"s new BBBEE Codes of
Good Practice and demonstrate Adcorp"s commitment to meeting these objectives.
4. Consideration and Payment
The consideration for the transaction is R13 million. As the consortium does not
have access to cash, Adcorp has agreed to a royalty arrangement based on future
turnover. The royalty will apply from the effective date until 31 December 2010
and is expected to return approximately R13 million plus interest. Should
Graphicor and Simeka TWS perform above expectations, Adcorp will receive in
excess of the R13 million and similarly a poor performance by these companies
will result in Adcorp receiving less than R13 million.
5. Conditions precedent
All suspensive conditions and conditions precedent have been met.
6. Financial Effects
The unaudited pro forma financial effects provided below is the responsibility
of the directors of Adcorp and is disclosed in order to provide shareholders
with information on the impact of the transaction on the results for the 12
months ended 31 December 2005.
The unaudited pro forma financial effects have been prepared in accordance with
International Financial Reporting Standards for illustrative purposes and,
because of their nature, may not fairly present the financial position of
Adcorp, changes in its equity or results of its operations or cash flows
subsequent to the implementation of the transaction.
The unaudited pro forma financial effects of the disposal on the earnings,
headline earnings, net asset value and net tangible asset value per Adcorp
share, before and after the transaction, are set out below:
Percentage
Before After change %
Earnings per share (cents) 156,2 113,5 (27,3)
Headline earnings per share (cents) 195,1 196,7 0,8
Net asset value per share (cents) 592 559 (5,6)
Net tangible asset value per share (cents) 402 390 (3,0)
Number of shares in issue ("000) 42 614 42 614 -
Weighted average shares in issue ("000) 41 730 41 730 -
Notes:
1. The figures in the "Before" column are extracted from the audited
results of Adcorp for the 12 months ended 31 December 2005.
2. The figures in the "After" column assume that the transaction was
implemented on 1 January 2005 for earnings purposes and 31 December
2005 for asset value purposes.
3. The 27,3% decrease in earnings per share is the result of once off
costs relating to the transaction disposal including the write off of
goodwill amounting to R13 million. If these once off costs were
removed, the "after" earnings per share would have been 158,1 cents,
which is an increase of 1,2%.
Bryanston
17 July 2006
Sponsor
Deloitte & Touche Sponsor Services (Pty) Ltd
(Incorporated in the Republic of South Africa)
(Registration number 1996/000034/07)
Attorney"s to Adcorp
Roodt Inc
Independent expert
Corporate Finance Division
Deloitte & Touche
Registered Auditors
Date: 17/07/2006 05:15:09 PM Produced by the JSE SENS Department
