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Acquisition of Business and Assets of Douglas Parker Associates from Lightstone Pty Ltd and Withdrawal of Cautionary
RGT SMART MARKET INTELLIGENCE LIMITED
Incorporated in the Republic of South Africa)
(Registration number: 2008/014367/06)
Share Code: RGT ISIN: ZAE000143715
("RGT SMART" or “the company”)
ACQUISITION OF THE BUSINESS AND ASSETS OF DOUGLAS PARKER
ASSOCIATES (“DPA”) FROM LIGHTSTONE PROPRIETARY LIMITED
(“LIGHTSTONE”) AND WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT
INTRODUCTION
Further to the cautionary announcement released on SENS on 1 February 2013, The
Company is pleased to advise shareholders that negotiations with regards to the
proposed purchase of the business and assets of DPA (“the Acquisition”) have been
concluded and the terms of the Acquisition are outlined in this announcement.
BACKGROUND AND RATIONALE
DPA has been involved in the research industry for many years and is particularly well
known in the property industry. RGT Smart is focussed on market research and
market intelligence, with a strong focus in the motor industry. Due to increased
demand and requests for market research and RGT Smart’s intention to diversify its
skills and technology into other sectors, the acquisition of DPA is seen as a natural fit
and the skills, reputation and existing business of both entities is expected to benefit
both DPA and RGT Smart going forward.
TERMS OF THE ACQUISITION
On 28 February 2013, the Company entered into an agreement with Lightstone, for
the purchase of the business and assets (excluding accounts receivable) of DPA,
which is currently a division of Lightstone.
The maximum purchase consideration is R4 500 000, less the value of the accounts
receivable balance as at 28 February 2013 (“the net purchase consideration”),
payable in cash. No profit warranties have been agreed and no restraint of trade
agreements have been concluded.
The effective date of the Acquisition is on 28 February 2013.
CATEGORISATION
The proposed Acquisition is a Category 2 acquisition for the Company as the Seller is
a related party per paragraph 10.1(b)(i) of the JSE Limited Listings Requirements.
However, the company is listed on the Alternative Exchange and the Acquisition is
less than 10% of the market capitalisation of the Company. Thus, a circular to
shareholders, incorporating a fairness opinion from an Independent Expert, is not
required.
UNAUDITED PRO FORMA FINANCIAL EFFECTS
The unaudited pro forma financial effects of the Acquisition are the responsibility of the
RGT Smart directors and have been prepared for illustrative purposes only to provide
information about how the Acquisition may affect the financial position and results of
RGT Smart and, because of its nature, may not give a fair reflection of RGT Smart’s
financial performance and position, changes in equity, and results of operations and
cash flows after the Acquisition, and are based on the assumptions that:
- For the purpose of calculating earnings per share and headline earnings per
share, the Acquisition was implemented from 01 March 2012; and
- For the purpose of calculating net asset value per share and net tangible asset
value per share, the Acquisition was implemented on 31 August 2012.
The pro forma financial effects have been prepared using accounting policies that
comply with IFRS and that are consistent with those applied in the audited results of
RGT Smart for the six months ended 31 August 2012.
Before the After the
Acquisition Acquisition Change
(“A”) (“B”) (%)
Earnings per share (cents) 0.2787 0.3965 42%
Headline earnings per share
(cents) 0.2811 0.3989 42%
Net asset value per share (cents) 6.2827 6.2827 0%
Tangible net asset value per
share (cents) 0.8812 0.2080 (76%)
Weighted average number of
shares in issue ('000) 496 811 496 811 0%
Number of shares in issue ('000) 441 322 441 322 0%
Notes and assumptions:
1. The amounts set out in the “Before the Acquisition” column above have been
extracted from the published unaudited consolidated financial results of RGT
Smart for the six months ended 31 August 2012.
2. Earnings and headline earnings per share in Column B take into account the
following:
- The assumption that the DPA divisional profit after tax was earned by the
RGT Smart group from 01 March 2012 to 31 August 2012;
- The assumption that the management account information provided for the
DPA division for the six month period can be relied upon;
- The interest received was assumed to be reduced by an interest calculation
based on the net purchase consideration using the actual interest rate
earned during the six month period at 4.8%; and
- Notional taxation assumed at 28%, where appropriate.
3. Net asset value per share and tangible net asset value per share in Column B
take into account the following:
- The DPA assets and liabilities (excluding accounts receivable) as at
31 August 2012;
- A cash payment of R4 500 000 less R1 606 538, being the accounts
receivable of DPA as at 31 August 2012;
- The excess amount paid above the net asset value of DPA has been
assumed as goodwill.
4. No impairment of goodwill has been assumed.
OTHER INFORMATION AND WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT
Due to the conclusion of the agreement as detailed in this announcement, the
cautionary announcement is hereby withdrawn.
The board would like to welcome the DPA team to RGT Smart.
Johannesburg
1 March 2013
Sponsor:
Arcay Moela Sponsors Proprietary Limited
Date: 01/03/2013 08:35:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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