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ACQUISITION OF SWICON360 PROPRIETARY LIMITED
ADAPTIT HOLDINGS LIMITED
Incorporated in the Republic of South Africa
(Registration number: 1998/017276/06)
Share code: ADI ISIN: ZAE000113163
(“ADAPT IT” or “the Group”)
ACQUISITION OF SWICON360 PROPRIETARY LIMITED
1. INTRODUCTION
The board of directors of ADAPT IT (“the Board”) is pleased to advise shareholders that agreement has
been reached between Adapt IT Proprietary Limited (“the Subsidiary“), a wholly-owned subsidiary of
ADAPT IT, and the vendors specified below (“the Vendors”) of Swicon360 Proprietary Limited (“Swicon”),
pursuant to which the Subsidiary has conditionally acquired 100% of the issued share capital in, and
certain claims against Swicon from Viker Investments Proprietary Limited, Markus Bucher, Maya Bucher
and Britehouse SSD Proprietary Limited (“the Acquisition”).
2. THE ACQUISITION
2.1 Nature of the Swicon business
Swicon, established in 2000, is an SAP® services partner that specialises in providing business
process outsourcing (“BPO”) services for the SAP ERP Human Capital Management (“SAP ERP
HCM”) solution to clients across diverse sectors, deployed in a cloud environment. These services
include payroll processing, human capital management services, employee and manager self
service, end user support and training. Swicon was one of the first providers of outsourcing services
powered by SAP software in South Africa. It has a highly qualified total staff of over 40 employees
located at the company offices in Bryanston, Johannesburg.
Swicon’s BPO services for SAP ERP HCM optimise business performance and help deliver lower
cost and higher service levels to businesses and individual employees in complex and distributed
geographic environments.
2.2 The rationale for the Acquisition
The Board believes that the Acquisition provides the Group with the requisite SAP technology
expertise and solutions to enable the Group to extend value adding services to its existing clients in
Mining and Manufacturing, as well as removing barriers to entry into new sectors, whilst
strengthening the Group’s Gauteng presence. Swicon has a compelling proprietary business offering
complemented by a blue chip client base, which will benefit from the Group’s wider offerings. The
Group also has many clients who run SAP, who will benefit from the Swicon solutions.
2.3 Purchase consideration
The purchase consideration consists of a cash consideration of R10.4 million, funded from existing
cash resources, and the issue of 1 000 000 ADAPT IT shares, valued at R1.3 million. R9.35 million
of the cash consideration is payable on closing and the balance of R1.05 million is payable twelve
months after closing. The ADAPT IT shares must be issued on expiry of the 12 month anniversary of
the closing date. Adapt IT will provide a working capital facility of R3.5 million to Swicon post the
transaction. Viker Investments Proprietary Limited, Markus Bucher and Maya Bucher have also
provided standard warranties relating to Swicon and its subsidiaries.
2.4 Conditions precedent and effective date
The Acquisition is conditional upon the fulfilment of the following conditions precedent:
- Board approvals by the Subsidiary and Vendors; and
- Finalisation of a new SAP Licence Agreement.
Closing is expected on or before 31 October 2012.
The effective date of the acquisition is 1 October 2012.
2.5 Memorandum of incorporation
As Swicon will on closing become a subsidiary of ADAPT IT, the memorandum of incorporation of
Swicon and its subsidiaries are to be amended to comply with Schedule 10 of the JSE Listings
Requirements as well as the Companies Act, 2008 (Act 71 of 2008), as amended.
3. PRO FORMA FINANCIAL EFFECTS OF THE ACQUISITION
The table below sets out the unaudited pro forma financial effects of the Acquisition, on ADAPT IT’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 ADAPT IT for the year ended 30 June 2012, had the Acquisition
occurred on 1 July 2011 for statement of comprehensive income purposes and as at 30 June 2012 for
statement of financial position purposes. The unaudited pro forma financial effects have been prepared
using accounting policies that comply with International Financial Reporting Standards (“IFRS”) and that
are consistent with those applied in the annual financial statements of ADAPT IT for the year ended 30
June 2012.
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 ADAPT IT’s
financial position, changes in equity, results of operations or cash flow.
Before the After the Percentage
Acquisition Acquisition change (%)
Basic earnings per share (cents) 17.46 17.66 1.15
Headline earnings per share (cents) 17.45 17.65 1.16
Net asset value per share (cents) 67.52 58.76 (12.98)
Tangible net asset value per share (cents) 30.70 18.00 (41.37)
Weighted average number of shares in issue (000’s) 103 904 104 904 1.02
Total number of shares in issue (000’s) 108 440 109 440 1.01
Notes:
1. The amounts in the “Before the Acquisition” column relate to the annual financial statements of
ADAPT IT for the year ended 30 June 2012.
2. The amounts in the “After the Acquisition” column reflect the financial effects of the Acquisition on
ADAPT IT as if it had occurred on 1 July 2011 for statement of comprehensive income purposes
and on 30 June 2012 for statement of financial position purposes.The most recent management
accounts of Swicon for the year ended 30 September 2012 have been used. ADAPT IT is satisfied
that these are reliable and consistent with the IFRS accounting polices of ADAPT IT.
3. The purchase price will be settled by way of a cash consideration of R10.4 million, funded from
existing cash resources, and the issue of 1 000 000 ADAPT IT shares, valued at R1.3 million.
R9.35 million of the cash consideration is payable on closing and the balance of R1.05 million is
payable twelve months after closing. The ADAPT IT shares must be issued on expiry of the 12
month anniversary of the closing date.
4. 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 July 2011.
5. 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 30 June 2012.
4. CLASSIFICATION OF THE ACQUISITION
The Acquisition is classified as a Category 2 transaction in terms of the Listings Requirements of JSE
Limited.
29 October 2012
Sponsor
Merchantec Capital
Transactional Attorneys for ADAPT IT
Shepstone and Wylie
Date: 29/10/2012 08:30:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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