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EOH - EOH Holdings Limited - Acquisition of TSS Managed Services (Proprietary) Limited Incorporated in the Republic of South Africa (Registration number 1998/014669/06) Share code: EOH ISIN: ZAE000071072 ("EOH" or "the company") ACQUISITION OF TSS MANAGED SERVICES (PROPRIETARY) LIMITED 1. INTRODUCTION The board of directors of EOH ("the Board") is pleased to advise shareholders that agreement has been reached between EOH Mthombo (Proprietary) Limited ("EOH Mthombo"), a wholly-owned subsidiary of EOH, and Tactical Software Systems (Proprietary) Limited ("TSS"), whereby EOH Mthombo will acquire 100% of the entire issued share capital ("sale shares") in and all claims ("sale claims") against TSS Managed Services (Proprietary) Limited (``TSSMS``) from TSS ("the Acquisition"). 2. THE ACQUISITION 2.1 Nature of the TSSMS business TSSMS was established in 2000 and has over 620 employees. TSSMS specialises in ICT Infrastructure Managed Services. These services include end user support, server management, network management, storage management, security management, infrastructure deployment and end user training. With its head office located in Woodmead, Johannesburg, and over 90 points of presence across South Africa, TSSMS is ideally placed to provide its clients with services to manage and maintain their ICT environment. TSSMS currently manages and supports over 50,000 devices across South Africa. 2.2 The rationale for the Acquisition The Board believes that the Acquisition provides EOH with further annuity revenue, increased capacity in the area of IT infrastructure support and will also increase EOH`s presence in the public sector. Enhancing EOH`s transformation process and BEE credentials were major drivers behind this Acquisition. 2.3 Purchase consideration The purchase consideration of R130.5 million is warranted by profit warranties of R35.0 million and R36.0 million net profit after tax in the first warranty period (being the first financial year ending 28 February 2012) and the second warranty period (being the second financial period ending 28 February 2013) respectively. The purchase consideration will be settled by way of a cash consideration of R41.94 million and the issue of 5 240 238 EOH shares, valued at R88.56 million at the effective date of the Acquisition. No specific third party funding is required. Settlement will be effected in equal tranches being, one third of cash and shares within 7 days of the transfer date (ie 7 days after the fulfilment of the conditions precedent) and a further one third each of cash and shares within 30 days of the issuance of the auditors` certificate at the end of the first warranty period and as soon as practicable after the second warranty period. In the event that the profit warranties in year one and/or year two are not met, settlement shall be pro rata to the actual net profit achieved after tax. 2.4 Conditions precedent and effective date All conditions precedent have been met with formalities being concluded before 8 July 2011. The effective date of the acquisition is 1 March 2011. 3. PRO FORMA FINANCIAL EFFECTS OF THE ACQUISITION The table below sets out the unaudited pro forma financial effects of the Acquisition, on EOH`s earnings per share, headline earnings per share, net asset value per share and tangible net asset value per share. The unaudited pro forma financial effects have been prepared to illustrate the impact of the Acquisition on the reported financial information of EOH for the six months ended 31 January 2011, had the Acquisition occurred on 1 August 2010 for income statement purposes and as at 31 January 2011 for balance sheet purposes. The unaudited pro forma financial effects have been prepared using accounting policies that comply with International Financial Reporting Standards and that are consistent with those applied in the reviewed results of EOH for the six months ended 31 January 2011 and the annual financial statements for the year ended 31 July 2010. The unaudited pro forma financial effects, which are the responsibility of the directors, are provided for illustrative purposes only and, because of their pro forma nature may not fairly present EOH`s financial position, changes in equity, results of operations or cash flow. Before the After the Percent Acquisition Acquisiti age on change
(%) Basic earnings per share 96.4 116.2 20.5 (cents) Headline earnings per share 96.2 116.1 20.7 (cents) Net asset value per share 593.0 616.3 3.9 (cents) Tangible net asset value per 19.1 14.5 (24.1) share (cents) Weighted average number of 72 446 77 686 7.2 shares in issue (000`s)
Notes: 1. The amounts in the "Before the Acquisition" column relate to the reviewed results of EOH for the six months ended 31 January 2011.
2. The amounts in the "After the Acquisition" column reflect the financial effects of the Acquisition on EOH as if it had occurred on 1 August 2010 for income statement purposes and on 31 January 2011 for balance sheet purposes.
3. The effects on basic earnings per share and headline earnings per share are calculated based on the assumption that the Acquisition was effected on 1 August 2010.
4. The effects on net asset value per share and tangible net asset value per share are calculated based on the assumption that the Acquisition was effected as at 31 January 2011.
4. CLASSIFICATION OF THE ACQUISITION The Acquisition is classified as a Category 2 announcement in terms of the Listings Requirements of the JSE. 5 July 2011 Sponsor Merchantec Capital Date: 05/07/2011 08:23:35 Supplied by www.sharenet.co.za Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited (`JSE`). The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct, indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on, information disseminated through SENS.
