| Wed 2 Aug 2006, 17:04 | | Gijima AST Group Limited - Terms Announcement |
|
GIJ
GIJ
Gijima AST Group Limited - Terms Announcement
GIJIMA AST GROUP LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1998/021790/06)
Share code: GIJ
ISIN: ZAE000064606
THE ACQUISITION BY GIJIMAAST OF 50% OF THUSO INFORMATION TECHNOLOGY
(PROPRIETARY) LIMITED FROM MAGOSHI INVESTMENT (PROPRIEARY) LIMITED
INTRODUCTION
GijimaAst Holdings (Proprietary) Limited ("GijimaAst" or "the Company"), a
wholly owned subsidiary of Gijima AST Group Limited ("Gijima AST Group")
currently owns 50 ordinary shares of a nominal value of R1,00 each and
representing 50% of the issued share capital of Thuso Information Technology
(Proprietary) Limited ("Thuso"). Magoshi Investment (Proprietary) Limited
("Magoshi") owns the remaining 50 ordinary shares of a nominal value of R1,00
each and representing 50% of the issued share capital of Thuso ("the shares").
GijimaAst intends to acquire the shares and any claims of any kind which Magoshi
may have against Thuso ("the claims", collectively "the shares and claims")
("the acquisition"). A sale and purchase agreement has been signed between
GijimaAst and Magoshi ("the parties") ("the sale and purchase agreement").
DESCRIPTION OF BUSINESS OF THUSO
Thuso is a multifunctional, black economic empowerment ("BEE") company which
provides a wide range of information technology services, products and solutions
to clients throughout South Africa. Thuso provides a range of managed services,
including desktop management and support outsource services, ICT procurement,
user support, overall project management, installation of business solutions,
applications and provision of related services, hardware and software solutions.
Clients are able to select individual services or a range of services customised
to their requirements or a total outsource of desktop management and support.
Work Force IT (Proprietary) Limited ("Work Force IT"), a wholly-owned subsidiary
of Thuso serves as the resource placement arm of Thuso. The Work Force IT
database includes various highly skilled and experienced professionals in the
fields of Web development, SAP and Oracle, amongst others. Work Force IT
specialises in the placement of permanent staff and temporary staff for both
short and long-term contracts.
RATIONALE
GijimaAst currently owns 50% of the issued shares in Thuso, which was initially
formed in 1999 with Magoshi as a BEE entity. As sole shareholder of Thuso,
GijimaAst would be able to extract synergies from control of Thuso through the
optimisation of facilities and working capital and operational efficiencies
arising from the combination of GijimaAst"s Resource Solutions Business Unit and
Work Force IT. In addition, GijimaAst is now an empowered company in its own
right and Thuso will therefore remain an empowered company post the conclusion
of the transaction.
TERMS OF THE ACQUISITION
In terms of the sale and purchase agreement, Magoshi will sell the shares and
claims to GijimaAst which purchases the shares and claims with effect from 3
July 2006 ("the effective date") as one indivisible transaction.
The purchase consideration payable by GijimaAst for the shares and claims is
R3.8 million ("the purchase consideration") and is to be apportioned to the
claims at their face value as at the effective date and the balance to the
shares. GijimaAst is entitled to deduct and set-off any and all amounts from the
purchase consideration which are owed to it by Magoshi.
The purchase consideration will be paid on the fifth business day following the
closing date, which is three business days after the date upon which the
conditions precedent have been fulfilled. All risk and benefit in the shares and
claims will pass to GijimaAst on the payment of the purchase price.
CONDITIONS PRECEDENT
The acquisition is subject, inter alia, to the fulfilment or waiver of the
following conditions precedent by 30 August 2006, or such later date as agreed
by the parties in writing:
- the required regulatory approvals; and
- the written approval of the sale and purchase agreement by the board of
directors of GijimaAst ("the board").
FINANCIAL EFFECTS
The pro forma financial effects of the acquisition on net asset value ("NAV"),
tangible net asset value ("TNAV"), earnings per share ("EPS") and headline
earnings per share ("HEPS") are set out in the table below.
The pro forma financial effects are the responsibility of the directors of
Gijima AST Group and are based on financial information of Gijima AST Group and
Thuso for the six months ended 31 December 2005. The pro forma financial
information has been prepared in accordance with The Guide on Pro Forma
Financial Information issued by the South African Institute of Chartered and
Accountants and the Listings Requirements of the JSE Limited ("the Listings
Requirements") pertaining to pro forma financial information.
The pro forma financial effects have been prepared for illustrative purposes
only and, due to their nature, may not necessarily reflect the financial
position of Gijima AST Group subsequent to the acquisition. It has been assumed
for purposes of the pro forma financial effects that the acquisition was
implemented on 1 July 2005 for income statement purposes and 31 December 2005
for balance sheet purposes.
Before After % Change
EPS c 1.05 1.08 3.19
HEPS c 1.07 1.10 3.14
NAV cps 27.63 27.62 (0.05)
TNAV cps 16.58 16.08 (3.02)
Notes and assumptions:
1. The EPS, HEPS, NAV and TNAV per GijimaAst share as set out in the
"Before" column of the above table are based upon the unaudited
interim results of Gijima AST Group for the six months ended 31
December 2005 and 964 666 528 weighted average number of shares in
issue.
2. The EPS, HEPS, NAV and TNAV per Gijima AST Group share as set out in
the "After" column of the above table are based on the financial
information of Thuso for the six months to 31 December 2005 on the
assumptions that:
- interest at a rate of 10.5% has been incurred in respect of the
purchase consideration;
- Thuso has been consolidated as a 100% held subsidiary of Gijima
AST Group;
- transaction costs of R190 000 have been incurred; and
- the tax effects related to the interest and transaction costs
above have been considered.
SMALL RELATED PARTY TRANSACTION
Marthinus Gerhardus Erasmus was a director of both GijimaAst and Thuso in the
12 months preceding the transaction and John Ramatsui is a director of Thuso and
Magoshi and although not a director of GijimaAst, is a member of the Executive
Committee of GijimaAst. Carlos Jorge Henriques Ferreira is currently a director
of both Thuso and GijimaAst. Consequently Messrs. Erasmus, Ramatsui and Ferreira
are related parties. In addition, the purchase consideration is less than 5% of
the market capitalisation of Gijima AST Groupas at the date of this
announcement. Therefore, in terms of the Listings Requirements, the acquisition
is a small related party transaction.
As a consequence, a fair and reasonable opinion by an independent expert
appointed to advise the board of the fairness and reasonableness of the
acquisition to Gijima AST Group"s shareholders is required in terms of the
Listings Requirements. The board will appoint an independent expert acceptable
to the JSE.
FURTHER ANNOUNCEMENT
A further announcement will be made in due course, detailing the fulfilment of
the conditions precedent and the opinion of the independent expert on the
completion of a fair and reasonable opinion.
Johannesburg
2 August 2006
Investment bank and sponsor
Standard Bank
Auditors
KPMG
Attorneys
Routledge Modise Moss Morris
Date: 02/08/2006 05:04:09 PM Produced by the JSE SENS Department
