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Onelogix Group Limited - Broad Based Black Economic Empowerment In The Group And Appointment Of Directors ONELOGIX GROUP LIMITED (Registration number 1998/004519/06) Share code: OLG ISIN: ZAE000026399 ("OneLogix Group" or "the group") Warning: The listing of the ordinary shares in the company is on the ALTX. Shareholders are advised of the risks of investing in a company listed on the ALTX. Shareholders are advised that the JSE does not guarantee the viability or the success of a company listed on the ALTX. In terms of the JSE Listings Requirements a designated advisor has to be retained by the company. The designated advisor is required to, inter alia, attend all board meetings held by the company to ensure that all JSE Listings Requirements and applicable regulations are complied with, approve the financial director of the company and guide the company in a competent, professional and impartial manner. If the company fails to retain a designated advisor it must make arrangements to appoint a new designated advisor within 10 business days, failing which the company faces suspension of trading of its securities. If a designated advisor is not appointed within 30 days of its suspension the company faces the termination of its listing without an offer to minority shareholders. BROAD BASED BLACK ECONOMIC EMPOWERMENT IN THE GROUP AND APPOINTMENT OF DIRECTORS Introduction Onelogix Group has reached agreement with Izingwe Capital (Proprietary) Limited regarding proposals to advance broad based black economic empowerment and transformation within the group. Subject to conditions referred to below, OneLogix Group proposes to facilitate the acquisition of 25% of the group"s wholly owned operating subsidiary, OneLogix (Proprietary) Limited ("OneLogix"), by a consortium led by Izingwe Capital and including black employees of the group. The acquisition has been structured to vest in the consortium from the outset the full economic benefit of and voting rights in respect of 25% of the issued shares of OneLogix, on an unencumbered basis. The consortium has undertaken to retain its shareholding for an extended period. Ultimately, the consortium"s shareholding in OneLogix will convert into listed shares in OneLogix Group. The consortium Izingwe, a black-owned investment company will hold 20% of the issued shares in Onelogix, be represented on the boards of OneLogix Group and OneLogix, participate in aspects of the operations and in the business development of the group in South Africa and elsewhere in Africa and lead the group"s transformation program. In addition, Izingwe will hold 5% of the issued shares in Onelogix in a trust for the benefit of black employees of the group. All black employees and particularly the group"s long-serving drivers and mechanics will hold vested interests in the trust, subject to remaining in the employ of the group for an extended period. The structure of the acquisition OneLogix Group has a claim on loan account against OneLogix in an amount of some R65 million, which OneLogix will settle by the issue of cumulative redeemable preference shares at a variable rate equal to 71% of 200 basis points above prime. Izingwe and the trust will subscribe at par for so many shares in OneLogix as, after the subscription, constitute 20% and 5% respectively of the issued shares of OneLogix. In addition, Izingwe will subscribe at par for one "A" ordinary share in OneLogix, with the result that the consortium will hold more than 25% of all voting rights and 25% of the economic benefit of ordinary shares in Onelogix. No later than the 8th anniversary of implementation of the acquisition, the OneLogix shares held by Izingwe and the trust will convert into listed shares in Onelogix Group based on relative fair values of OneLogix Group and OneLogix at the date of conversion. Following the conversion, Onelogix Group will again beneficially own 100% of OneLogix. Pro Forma Financial Effects The pro-forma financial effects of the acquisition set out in the table below have been prepared for illustrative purposes only to show how the acquisition may have affected the group"s published results for the year ended 31 May 2005 ("the year end results"). Because of their nature the pro-forma financial effects will not clearly reflect Onelogix Group"s financial position after the acquisition. PricewaterhouseCoopers Inc. will report on the financial effects in the circular to shareholders. Year end Pro-forma Percentage results before year end change (%)
the results acquisition after the (cents) acquisition Note 1 (cents)
Note 2 Headline earnings 6.7 5.8 (13.8) per share Earnings per 6.7 5.8 (13.8) share Note 1 The "year end results before the acquisition" column reflects Onelogix Group"s earnings per share and headline earnings per share as published in the year end results. Note 2 The "pro-forma year end results after the acquisition" column reflects the effects of the acquisition on the earnings per share and headline earnings per share based on the following assumptions: - the acquisition was effective 1 June 2004; - a total dividend of R5.8 million would have been declared and paid by Onelogix - to Onelogix Group for the financial year ended 31 May 2005; outside shareholders" profit attributable to the BEE consortium of an amount of R1.8 million. Note 3 The effect on net asset value per share and net tangible asset value per share are not material and have therefore not been disclosed. Accounting treatment of the acquisition In accordance with the rules of the JSE Limited ("JSE"), the underlying accounting treatment is in accordance with the accounting policies set out in the last published audited financial information. In presenting the impact for OneLogix Group, information is to be presented in accordance with SA GAAP as it existed as at 31 May 2005. OneLogix Group has not yet adopted International Financial Reporting Standards. Conditions and circular to shareholders The acquisition is conditional on JSE and the requisite shareholder approvals. A circular including notice of a general meeting will be mailed to shareholders in due course. Appointments to the board of Onelogix Group On implementation of the acquisition, Sipho Pityana will be appointed non- executive chairman and Tsakani Matshazi a non-executive director of OneLogix Group. Sipho is the executive chairman of Izingwe, has held positions including Director General of the Departments of Labour and Foreign Affairs and Managing Director of Nedbank Strategic Business Development, and is currently Deputy Chair of Aberdare Cables, a director of HSRC and on the board of Bytes Technologies. Tsakani, a chartered accountant, is the financial director of Izingwe, having completed articles at PricewaterhouseCoopers Inc. before working in private equity at Worldwide Capital and as manager of a business unit within the Eastern Cape Development Corporation. Kempton Park 30 August 2005 CORPORATE ADVISOR, LEGAL ADVISOR AND DESIGNATED ADVISOR Java Capital (Proprietary) Limited REPORTING ACCOUNTANTS PricewaterhouseCoopers Inc. Date: 30/08/2005 07:06:08 AM Supplied by www.sharenet.co.za Produced by the JSE SENS Department
