ECSPONENT LIMITED - Terms announcement relating to the disposal of debtors books and related assets

Terms announcement relating to the disposal of debtors books and related assets

ECSPONENT LIMITED
Incorporated in the Republic of South Africa
Registration number: 1998/013215/06
JSE Code: ECS – ISIN: ZAE000136677
(‘the Company’ or ‘ECS’ or ‘the Group’)


TERMS ANNOUNCEMENT RELATING TO THE DISPOSAL OF DEBTORS BOOKS AND
RELATED ASSETS

Shareholders are notified that Ecsponent Credit Services Proprietary Limited (“Ecsponent Credit
Services”), a wholly owned subsidiary of ECS, has entered into an agreement to dispose of its
Employee Benefit assets (“the Assets”) to Getbucks Proprietary Limited (“Getbucks”) for a purchase
consideration of R52 million (“the Disposal”)". The Group carries the assets at a book value of R34
million.

Description of the Assets and rationale for the transaction
Ecsponent Credit Services provides loan funding to individuals on an employee benefits basis and
secured by payroll deductions (“payroll loans”) as well as providing loans to SME’s. The Company
decided to dispose of the Employee Benefit Assets in order to further reduce the overhead cost of
providing retail credit whilst increasing the quantum and return on the corresponding provision of
credit to SME’s. The Assets to be disposed consist of:

-   Debtors Books
The Debtors Books consists entirely of payroll loans from the micro finance business operated by
ECS subsidiaries .

-   Customer Data Base
The Customer Data Base consists of customer details pertaining to the debtors that form part of the
Debtors Books and/or any future potential borrowers.

-    Employer Contracts
Rights, title and interest in and to the contracts in terms of which certain employers agreed to monthly
payroll deductions in favour of ECS subsidiaries, in terms of the loan agreements concluded between
Ecsponent Credit Services and its clients.

-    Marketing Rights
Rights of Ecsponent Credit Services relating to the marketing of micro finance products and related
services.

-     Intellectual Property
All rights of Ecsponent Credit Services in and to all trademarks, designs, names, devices logos,
domain names, processes and process methodologies relating to the provision of micro finance and
related services.

Net profits after tax generated by the Group from the Assets amounted to R1, 032,288 for the year
ended 31 December 2014. It is however expected that this income will be replaced by income
generated from Ecsponent’s increased wholesale funding.

Application of the proceeds
The consideration will be used to fund organic growth within the Group.

Terms of the agreement
Interest is payable at a rate of 11% per annum, compounded monthly. The total consideration
(including interest) will therefore be settled in cash as follows;
    - Initial deposit amount of R7 450 000 on 5 June 2015
    - 12 equal monthly instalments of R3 729 000
    - a final payment of R3 727 841 on 30 June 2016


Getbucks has provided cession and pledge of the proceeds of the Debtors Book and such additional
portion of its current debtors as may be required in order to give to Ecsponent Credit Services a
continued covering security equal to one and half times the outstanding balance of the consideration
price, as security for its obligations.

In addition to terms that are normal concerning a transaction of this nature and including normal
reversionary clauses, Ecsponent Credit Services have undertaken to not, up to the third anniversary of
the signature of the agreement, be engaged in or concerned with any business carried on in the
Republic of South Africa similar to the business carried on by Getbucks on 1 June 2015.


Effective date
The effective date of the Disposal is 1 June 2015. The board advises that the due diligence has been
successfully concluded and there are no further conditions precedent to the agreement.

The Disposal is categorised as a Category 2 transaction and is not a related party transaction. The
Disposal therefore does not require approval by shareholders of ECS.


Pretoria
4 June 2015


Sponsor
Questco Proprietary Limited

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