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EFG - Efficient - Acquisition of Shareholding in Efficient Financial Services
(Proprietary) Limited
EFFICIENT GROUP LIMITED
(formerly Efficient Financial Holdings Limited)
Incorporated in the Republic of South Africa
(Registration Number: 2006/036947/06)
Share code: EFG
ISIN: ZAE000151841
("Efficient")
ACQUISITION OF SHAREHOLDING IN EFFICIENT FINANCIAL SERVICES (PROPRIETARY)
LIMITED ("EFS")
1. Introduction
Shareholders are advised that Efficient concluded an agreement on 29 November
2011 (the "Acquisition Agreement") in terms of which, inter alia, Efficient
has acquired a 10.18% shareholding in EFS (a subsidiary of Efficient) from
Peter James Hewett ("Hewett") (the "Acquisition"), after which Acquisition EFS
shall become a wholly-owned subsidiary of Efficient, in exchange for the
allotment and issue by Efficient of a maximum of 2,085,000 shares in Efficient
to Hewett (the "Consideration Shares").
Hewett is the managing director of EFS and a related party to Efficient as
contemplated in section 10.1(b)(ii) of the JSE Listings Requirements. Hewett
is also a prescribed officer, as contemplated in the Companies Act, 2008 (the
"Companies Act"). Accordingly, the allotment and issue of the Consideration
Shares to Hewett, remains subject to the requisite shareholder approval under
section 41 of the Companies Act (the "Condition Precedent").
Shareholders are advised that Efficient has posted a notice of general meeting
dated 30 November 2011 (dispatched together with its Annual Report and Notice
of Annual General Meeting) to its shareholders in respect of obtaining the
requisite shareholder approval under section 41 of the Companies Act, which
meeting will be held in the main boardroom at the head office of Efficient,
situated at 81 Dely Road, Hazelwood, Pretoria on Monday, 23 January 2012 at
the later of 11h00 and the conclusion of the Annual General Meeting for the
financial year ended 31 August 2011 (also to be held in the main boardroom at
the head office of the Company situated at 81 Dely Road, Hazelwood, Pretoria
on Monday, 23 January 2012 at 10h00).
2. The Acquisition
The terms of the Acquisition set out in the Acquisition Agreement are set out
below:
2.1. Subject to the fulfilment of the Condition Precedent but with effect from
1 September 2011 (the "Effective Date"), Efficient shall acquire from Hewett
34 ordinary shares in EFS which constitutes a 10.18% shareholding in EFS
(the "Acquisition Shares");
2.2. the consideration payable by Efficient for the Acquisition Shares is a
maximum of 2,085,500 shares in the share capital of Efficient, payable in two
tranches: (i) 820,500 of the Consideration Shares to be allotted and issued
within three business days of the fulfilment of the Condition Precedent; and
the balance of the Consideration Shares (up to a maximum of 1,265,000
Consideration Shares) on 1 September 2014 (the "Conditional Issue"), which
Conditional Issue is subject to the achievement of the profit guarantee as is
detailed in paragraph 2.3 below; and
2.3. Hewett guarantees that Efficient, through its subsidiaries, will generate
a cumulative profit from financial- and asset management services rendered to
clients, as a direct result of business generated through the facilitation of
Hewett, over a 3 (three) year cumulative period from the Effective Date, equal
to R9 400 000.00 (nine million four hundred thousand Rand) (the "Profit
Guarantee"). If the Profit Guarantee is not achieved, the Consideration Shares
comprising the Conditional Issue shall be reduced pro rata in accordance with
a pre-determined formula as is set out in the Acquisition Agreement.
Rationale
Pursuant to Efficient acquiring the Acquisition Shares EFS will be a wholly-
owned subsidiary of Efficient. The acquisition of the Acquisition Shares from
the managing director of Efficient`s subsidiary company, is an implementation
of Efficient`s initiative to incentivise senior personnel on group level as
opposed to subsidiary company level.
Related party transaction
The Acquisition is a small related party transaction as defined in terms of
section 10.7 of the JSE Listings Requirements. BDO Corporate Finance (Pty)
Ltd, which were appointed as independent professional expert to determine
whether the terms of the Acquisition are fair to shareholders of Efficient,
have concluded that the terms and conditions of the Acquisition is fair to
shareholders of Efficient. A copy of their report will be available for
inspection at the offices of Efficient, being 81 Dely Road, Hazelwood,
Pretoria, 0081 from the date of issue of this announcement until the expiry of
a 28 day period.
FINANCIAL INFORMATION
The unaudited pro forma financial effects, set out in the table below, have
been prepared for illustrative purposes only, to provide information on how
the Acquisition may have impacted Efficient`s audited consolidated financial
statements for the year ended 31 August 2011.
Due to their nature, the unaudited pro forma financial effects may not fairly
present Efficient`s financial position, changes in equity, results of
operations or cash flows following the Acquisition. The unaudited pro forma
financial effects are the responsibility of the directors of Efficient and
have not been reviewed or reported on by Efficient`s auditors.
The unaudited pro forma financial effects of the Acquisition on Efficient`s
basic earnings per share, headline earnings per share for the year ended 31
August 2011 as well as net asset value and net tangible asset value per share
as at 31 August 2011 are set out below.
Scenario 1 - Excluding Conditional Issue Before the Pro forma Change
Acquisition after the
Acquisition
Basic EPS (cents) 7.77 7.50 -3.5%
Headline EPS (cents) 7.77 7.50 -3.5%
Weighted average shares in issue (`000) 39 939 40 760
Scenario 2 - Including Conditional Issue Before the Pro forma Change
Acquisition after the
Acquisition
Basic EPS (cents) 7.77 7.27 -6.4%
Headline EPS (cents) 7.77 7.27 -6.4%
Net asset value per share (cents) 195.9 186.35 -4.9%
Net tangible asset value per share 86.91 82.76 -4.8%
(cents)
Weighted average shares in issue (`000) 39 939 42 025
Notes:
Scenario 1 is calculated using only the Consideration Shares to be allotted
and issued within three business days after the fulfilment of the Condition
Precedent. The impact on net asset value per share and net tangible asset
value per share in Scenario 1 are considered to be immaterial and therefore
have not been disclosed.
Scenario 2 is calculated assuming all of the Consideration Shares are issued,
being the shares referred to in Scenario 1 above and the balance of the
Consideration Shares (up to a maximum of 1,265,000 Consideration Shares) to be
issued on 1 September 2014, subject to the achievement of the Profit Guarantee
detailed in paragraph 2.3 above, assuming the Profit Guarantee is fully
achieved.
The amounts set out in the "Before the Acquisition" columns have been
extracted, without adjustment, from the audited consolidated financial
statements of Efficient for the year ended 31 August 2011.
The Acquisition is assumed to have been implemented on 1 September 2010 for
purposes of basic earnings per share and headline earnings share, the result
being that the profit for the year attributable to shareholders of Efficient
would have been R48 000 lower. This amount represents Hewett`s portion of the
loss generated by EFS for the year ended 31 August 2011.
The Acquisition is assumed to have been implemented on 31 August 2011 for
purposes of net asset value and net tangible asset value per share, the result
being that the net asset value and net tangible asset value of Efficient would
have been R69 000 higher. This amount represents Hewett`s portion of the
accumulated profits and losses for EFS until 31 August 2011.
All adjustments have a continuing effect.
1 December 2011
Sponsor
Java Capital
Independent expert
BDO Corporate Finance (Pty) Ltd
Date: 01/12/2011 16:56:10 Supplied by www.sharenet.co.za
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