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IDE - Ideco Group Limited - Disposal of Ideco Biometric Security Solutions (Pty) Limited and renewal of cautionary Ideco Group Limited Incorporated in the Republic of South Africa Registration number 2001/023463/06 Share code: IDE ISIN code: ZAE000107579 ("Ideco" or "the Company") DISPOSAL OF IDECO BIOMETRIC SECURITY SOLUTIONS (PTY) LIMITED AND RENEWAL OF CAUTIONARY 1. INTRODUCTION Ideco is pleased to announce that it has signed a sale of shares and claims agreement ("the sale agreement"), dated 21 September 2011, with Marius Coetzee (the "Purchaser"), in terms of which the Purchaser will acquire the shares and claims in Ideco Biometric Security Solutions (Proprietary) Limited ("IBSS") ("the Proposed Transaction") from the Company. 2. THE PROPOSED TRANSACTION 2.1 BACKGROUND TO THE PROPOSED TRANSACTION Ideco has taken the strategic decision to refocus its resources on providing transaction based verification services to the African market and therefore has decided to sell IBSS which is regarded as non-core in terms of Ideco`s refocused strategy. 2.2 DESCRIPTION OF BUSINESS TO BE DISPOSED OF IBSS provides a sophisticated support mechanism to the security industry in South Africa through the supply, service and support of biometric terminals for access control, time and attendance and identity management through its partner distribution channels. Furthermore, IBSS is the sole distributor of Safran Morpho fingerprint biometric terminals in South Africa. 2.3 RATIONALE FOR THE PROPOSED TRANSACTION During the past year the board of Ideco took the view that the biometric terminal distribution business of IBSS has become non-core to Ideco and as a result the board has taken the strategic decision to dispose of its interest in IBSS. It is a key objective for Ideco that IBSS carries on uninterrupted and maintains its position in the market. The Purchaser of IBSS is regarded as the preferred acquirer because he understands the complexities of IBSS, he has already existing relationships with Safran Morpho and can run IBSS independently from Ideco. The Purchaser joined IBSS in 1998 and over the last few years has been responsible for the daily management of IBSS. 2.4 PURCHASE CONSIDERATION FOR THE PROPOSED TRANSACTION Ideco has disposed of its shares and claims in IBSS for a total purchase consideration of R20.2 million, which shall be paid by the Purchaser within 24 months of 1 August 2011 in accordance with the agreed payment schedule. 2.5 CONDITIONS PRECEDENT The Proposed Transaction is subject to, inter alia, the fulfillment or waiver of the following conditions precedent: a. all relevant resolutions have been adopted and steps have been taken by the Purchaser and Ideco so as to enter into and
implement the Proposed Transaction; b. IBSS has entered into employment agreements with a list of pre- agreed employees currently employed by Ideco, which employment agreements shall contain a non-compete clause;
c. Ideco has confirmed in writing that all the required approvals of the JSE Limited ("JSE") have been obtained in relation to the implementation of the Proposed Transaction; d. Safran Morpho has confirmed in writing that Safran Morpho shall continue to supply biometric readers to IBSS and provide support to IBSS; e. Ideco has transferred ownership of all the fixed assets, as agreed to IBSS;
f. Ideco has transferred all licenses and/or ownership in and to the intellectual property, it being specifically recorded that Ideco has procured the consent of any third party required to the extent that Ideco did not own any intellectual property
rights to IBSS; g. an agreement has been entered into between the Purchaser and Purchaser for the supply of biometric terminals, and has become unconditional in all respects;
h. an agreement has been entered into between Ideco Biometrix (Pty) Limited ("Biometrix") and IBSS and has become unconditional in all respects, in terms of which Biometrix has ceded and assigned to IBSS its rights and obligations in and to
the agreements with the agreed customers; i. a cession in securitatem debiti in respect of the debtors of IBSS in favour of Ideco has been entered into and become unconditional in all respects, save to the extent that they may
be conditional upon the entering into of the sale agreement; and j. a general notarial bond over the stock of IBSS has been entered into and become unconditional in all respects, save to the
extent that they may be conditional upon the entering into of the sale agreement. 2.6 EFFECTIVE DATE The effective date of the Proposed Transaction is, subject to the fulfillment of the conditions precedent, 1 August 2011. 2.7 PROCEEDS OF THE PURCHASE CONSIDERATION The board will carefully consider how the proceeds from the Proposed Transaction should be deployed in order to enhance shareholder value. 3. CIRCULAR TO IDECO SHAREHOLDERS In terms of paragraph 21.10 of the JSE Listings Requirements, the Proposed Transaction is categorised as a Category 1 transaction. Due to the size of the Proposed Transaction shareholder approval is required and a circular will be sent to shareholders in due course, containing a notice of general meeting. 4. FURTHER CAUTIONARY The pro forma financial effects of the Proposed Transaction have not yet been finalised. Shareholders are therefore advised to continue exercising caution when dealing in the Company`s securities until such information is released. For and behalf of the board. Bryanston 22 September 2011 Designated Advisor and Transaction Advisor QuestCo Sponsors (Pty) Limited Date: 22/09/2011 16:00:02 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.
