| Tue 27 Mar 2007, 10:25 | | UCS - UCS - Acquisition by UCS of a 51% interest i |
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UCS
UCS
UCS - UCS - Acquisition by UCS of a 51% interest in the equity of 3J Holdings
UCS GROUP LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1993/002253/06)
JSE code: UCS
ISIN: ZAE000016150
("UCS" or "the UCS Group")
ACQUISITION BY UCS OF A 51% INTEREST IN THE EQUITY OF 3J HOLDINGS (PROPRIETARY)
LIMITED ("3J HOLDINGS") (10.7(c))
1. Introduction (9.15(a)(i))
Shareholders are advised that in terms of an agreement, dated 14 March
2007, UCS has acquired, subject to the fulfilment of the condition
precedent referred to below, a 51% interest in the equity of 3J Holdings
("the Transaction").
2. Background information (9.15(b) & (e))
UCS is an IT business with a primary focus on the provision of software,
solutions and services for selected markets. UCS has achieved a leadership
position in South Africa`s retail sector and is well positioned for further
growth locally and internationally through a number of defined initiatives.
3J Holdings is the holding company of a number of trading entities which
supply computer consumables, equipment, software or services. Prior to the
implementation of the Transaction, all of the equity in 3J Holdings was
held by management members of the 3J Holdings group of companies (the
"Vendors"),
The net asset value of 3J Holdings, which is the subject of the 51% equity
acquisition, as at 28 February 2007, was R5-million.
3. Rationale (9.15(g))
The 3J Holdings group of companies provide computer consumables, equipment,
software and/or services into the retail environment and share a number of
common customers with Computerkit Holdings (Pty) Limited ("Computerkit") an
existing 100% held subsidiary company of the UCS Group. The Transaction
should enable UCS to position a "one stop shop" for Computerkit clients
while aligning the interest of the respective management teams and
providing the appropriate incentivisation and retention mechanism.
4. Purchase consideration and settlement (9.15(c))
The maximum purchase price payable by UCS to the Vendors for the 51%
interest in 3J Holdings will be R12 240 000, which will be settled by the
allotment and issue of a maximum of 4 837 945 UCS ordinary shares (the
"Consideration Shares") to the Vendors, pro rata to their current holdings,
at an issue price of R2.53 each. The Consideration Shares are to be issued
in two tranches as follows:-
* 50% on the closing date (i.e. on fulfilment of the condition precedent
referred to below and receipt of audited effective date financial
statements); and
* 50% after the receipt of the audited accounts of 3J Holdings for the
seven months ending 30 September 2007.
Certain profit warranties pertain to the Transaction, which may result in a
lesser number of Consideration Shares being allotted and issued to the
Vendors if such warranties are not achieved. UCS also has a call option on
a portion of the Consideration Shares which will be bought back, pro rata
at par value, if profit after tax requirements in respect of the year
ending 30 September 2008 are not met.
In addition to the above, the Consideration Shares issued have a five year
selling restriction attached to them in that full value can only be
realised over the five years from the effective date if the Vendors remain
in the employ of the UCS Group as follows: 2008: 10%; 2009: 25%; 2010: 45%;
2011: 70%; 2012: 100%.
5. Effective date (9.15(a)(iv))
The Transaction will be effective from 1 March 2007.
6. Conditions precedent (9.15(a)(v))
The Transaction remains conditional on competition commission approval
being granted by the competition authorities.
7. Financial effects (9.15(d) and (f))
The unaudited pro forma financial effects, for which the directors are
responsible, are provided for illustrative purposes only to show the effect
of the Transaction on earnings and headline earnings as if the Transaction
had taken effect on 1 October 2005 and on net asset value and net tangible
asset value per share as if the Transaction had taken effect on 30
September 2006. Because of their nature, the unaudited pro forma financial
effects may not give a fair presentation of the UCS Group`s financial
position and performance. The unaudited pro forma financial effects have
been compiled from the audited consolidated financial statements for the
year ended 30 September 2006 and are presented in a manner consistent with
the format and accounting policies adopted by UCS and have been adjusted as
described in the notes below:
Movement
Audited Unaudited
Before the After the
Notes Transaction Transaction (cents) (%)
Basic earnings per 2&4 34.3 35.3 1.0 2.9
share (cents)
Basic headline 2&4 23.4 24.1 0.7 3.0
earnings per share
(cents)
Net asset value per 3 120.8 126.7 5.9 4.9
share (cents)
Net tangible asset 3 37.8 38.1 0.3 0.8
value per share
(cents)
Weighted average 243 134 246 359 3 225 1.3
number of shares in
issue (000`s)
Notes:
1. The "Audited Before the Transaction" column reflects the audited
results of UCS for the 12 months ended 30 September 2006.
2. The latest available financial results for 3J Holdings being the
consolidated management accounts for the financial year ended 28
February 2007 were used to determine the "After the Transaction" pro
forma results
3. Net asset and tangible net asset value calculations in the "After the
Transaction" column were completed assuming the Transaction was
concluded at the balance sheet date of 30 September 2006.
4. Basic earnings and headline earnings per share calculations in the
"After the Transaction" column are based on the following assumptions:
- 2 418 973 UCS ordinary shares were issued on 1 October 2005.
- A further 2 418 972 UCS ordinary shares were issued on 1 June
2006 (i.e. 8 months after the effective date and on the
assumption that actual profits achieved for the 7 month period 1
October 2005 to 31 May 2006 exceeded warranted profits.)
- The pro forma financial effects assume that the fair value of the
purchase consideration at 1 March 2007 will approximate the fair
value at the payment dates which values can only be determined at
that date.
8. Details of the Vendors and classification of the Transaction
(9.15(a)(ii) / 10.1(b)(ii))
Two of the Vendors, being directors and beneficial shareholders of 3J
Holdings (i.e. Messrs. KC Venn and G Matheson) are also directors of
ComputerKit and are therefore considered to be "related parties" in terms
of the Listings Requirements of the JSE Limited ("JSE").
The Transaction is classified as a small related party transaction in terms
of paragraph 10.7 of the Listings Requirements of the JSE and no action is
required by UCS shareholders in regard thereto.
9. Fair and reasonable opinion (10.7(c))
In terms of the Listings Requirements of the JSE, an independent opinion
relating to the fairness and reasonableness of the Transaction has been
issued by KPMG Services (Proprietary) Limited and this opinion is available
for inspection at the company`s registered office (20th Floor, 209 Smit
Street, Braamfontein, Johannesburg) until 26 April 2007.
Johannesburg
27 March 2007
Sponsor
Barnard Jacobs Mellet Corporate Finance (Pty) Limited
Independent expert
KPMG Services (Pty) Limited
Legal adviser
Jowell Glyn & Marais
Date: 27/03/2007 10:25:00 Produced by the JSE SENS Department.
