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Business Connexion To Dispose Of Its Q Link Business Unit
Business Connexion Group Limited
(Incorporated in the Republic of South Africa)
(Registration number 1988/005282/06)
Share code: BCX
ISIN: ZAE000054631
("Business Connexion" or the Group)
BUSINESS CONNEXION DISPOSES OF ITS Q LINK BUSINESS UNIT
1. INTRODUCTION
Shareholders of Business Connexion (Shareholders) are advised that the Group has entered into an agreement to dispose of its entire interest
in the Q LINK business unit (Q LINK) to Summit Garnishee Solutions (Pty) Limited (SGS) as a going concern for a cash consideration of
R187.5 million (the Consideration) (the Disposal). SGS is a privately-owned company that is not a related party to the Group.
The effective date of the Disposal is 1 September 2013. The Consideration will be settled in full on the date that the last suspensive condition
is fulfilled.
2. RATIONALE FOR THE DISPOSAL
Q LINK provides a one-stop collections platform that overcomes the complexity of multiple disparate interfaces to a variety of collection channels,
including bank debits and payroll deductions. Q LINK has grown to the extent that its future vision and strategy requires greater alignment with
the financial services sector. As a result, Q LINK no longer forms part of the core business strategy of the Group and the board of directors of BCX
("the Board") opted to dispose of Q LINK and realise value.
3. SUSPENSIVE CONDITIONS
The Disposal remains subject to, inter alia, the parties obtaining the requisite regulatory approvals and SGS concluding the necessary funding agreements
to settle the Consideration, hosting service level agreements and sub-lease agreements, all of which must occur by no later than 31 October 2013.
Shareholders will be notified in a further announcement once the Disposal becomes unconditional.
4. PRO FORMA FINANCIAL EFFECTS OF THE DISPOSAL
The table below sets out the unaudited pro forma financial effects of the Disposal based on the assumption that the Disposal was effective from
1 September 2012 for purposes of basic earnings per share (EPS) and headline EPS (HEPS) and on 28 February 2013 for purposes of net asset value
per share (NAV) and tangible NAV (TNAV).
The unaudited pro forma financial effects are presented for illustrative purposes only and, because of their nature, may not fairly present
Business Connexions financial position, changes in equity, results of operations or cash flows after the Disposal has been implemented. The unaudited
pro forma financial effects are the responsibility of the directors of Business Connexion.
For the six months ended 28 February 2013, Q LINK contributed R13.7 million to the headline earnings of the Group.
Pro Forma
Before the Disposal After the Disposal
(Column A) (Column B)
(Note i) (Note ii) Percentage Change (%)
NAV (cents)
521.6 556.9 6.8
TNAV (cents)
319.3 354.6 11.1
HEPS (cents)
19.1 15.7 (17.9)
Diluted HEPS (cents)
19.0 15.6 (17.9)
EPS (cents)
19.6 51.9 164.9
Diluted EPS (cents)
19.5 51.6 164.9
Weighted average number of ordinary shares ('000)
400 446 400 446
Diluted weighted average number of ordinary shares ('000)
402 660 402 660
Notes:
i. The financial information in Column A has been extracted from the unaudited interim results of Business Connexion for the six months ended 28 February 2013.
ii. The financial information set out in Column B has been based on the financial information set out in Column A after adjusting for the deconsolidation of
Q LINK and the effects of the Disposal based on the following assumptions:
a. no notional interest on the Consideration has been accounted for;
b. capital gains tax amounting to R32.8 million was incurred as a result of the Disposal; and
c. no transaction costs were incurred in relation to the Disposal.
5. APPLICATION OF CONSIDERATION
The Board will consider the best application for the proceeds derived from the Disposal, taking into account the Group's strategy and funding requirements. Such
application may include, inter alia, the repurchase of shares by the Group or further acquisition opportunities.
6. CATEGORISATION OF THE DISPOSAL
The Disposal is classified as a Category 2 transaction in accordance with the JSE Limited Listings Requirements and does not require Shareholder approval.
Midrand
5 September 2013
Sponsor
One Capital
Date: 05/09/2013 09:10:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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