Wrap Text
Acquisition of Retail Mobile Credit Specialists Pty Limited
BLUE LABEL TELECOMS LIMITED
(Incorporated in the Republic of South Africa)
Registration number: 2006/022679/07
Ordinary Shares share code: BLU
ISIN: ZAE000109088
(“Blue Label” or “the Company”)
ANNOUNCEMENT REGARDING THE ACQUISITION BY THE PREPAID COMPANY
PROPRIETARY LIMITED (TPC) OF THE ENTIRE ISSUED SHARE CAPITAL OF RETAIL
MOBILE CREDIT SPECIALISTS PROPRIETARY LIMITED (“RMCS”)
1. INTRODUCTION
Blue Label shareholders are advised that TPC, a wholly owned subsidiary of Blue Label,
has entered into an agreement with RMCS’ shareholders, namely Pharaoh Limited, The
Karoobos Trust, The Rooibos Trust, Adam Greenblatt, Bradley Ivan Kark, Keith Larry
Brouze, Michael Roffey, Ran Goldstein, Shaun Hurwitz and Terence Nicholas Lazard and
in terms of which TPC will acquire 100% of RMCS’s issued share capital. The agreement
is subject to the fulfilment of certain conditions precedent.
2. NATURE OF THE BUSINESS
RMCS is an enhanced service provider of cellular products and services engaged in the
supply of telecommunication products and services, content, data and allied activities via
both physical and virtual mediums. The physical presence is in the form of stores and the
virtual offering is in the form of an “Over the Air” cellular application which enables
retailers, credit providers and consumers to communicate and transact over their mobile
devices.
3. RATIONALE FOR THE ACQUISITION
The acquisition of RMCS gives TPC access to new channels for the distribution of both
RMCS and Blue Label products and services.
4. CONSIDERATION
4.1 The purchase consideration is the sum of R306 588 511 (”initial payment”) and,
subject to certain earnings targets being achieved during the 12 month period
ending 31 August 2014, an additional amount not exceeding R32 141 276.
4.2 The initial payment will be made three working days following the fulfilment of the
suspensive conditions and any additional amounts are payable within 5 days of
the determination of the earnings to which the payments relate.
4.3 The purchase consideration will be funded from TPC’s existing cash resources.
5. CONDITIONS PRECEDENT TO THE ACQUISITION
The acquisition is subject to the fulfilment or waiver of the following conditions precedent:
5.1 The approval of the Competition Authority.
5.2 TPC being reasonably satisfied with the terms of certain key agreements.
5.3 The execution of certain supplier and customer agreements by RMCS.
6. FINANCIAL EFFECTS
The unaudited pro forma financial effects set out below have been prepared for
illustrative purposes only in order to assist Blue Label shareholders in assessing the
impact of the acquisition on the earnings per share (“EPS”) and headline earnings per
share (“HEPS”). The unaudited pro forma financial effects have been prepared for a 12
month period and are based on Blue Label’s audited results for the year ended 31 May
2013 and RMCS’s management accounts for the year ended 31 May 2013.
The unaudited pro forma financial effects have been prepared in accordance with the
Listing Requirements, the Guide on Pro Forma Financial information issued by the
South African Institute of Chartered Accountants and the measurement and recognition
requirements of the international Financial Reporting Standards (“IFRS”). The
accounting policies used to prepare the unaudited pro forma financial effects are
consistent with those applied in the preparation of the financial statements for the year
ended 31 May 2013.
The unaudited pro forma financial effects have been prepared for illustrative purposes
only, in order to provide information on how the proposed acquisition may have affected
the financial results of Blue Label and how they may have impacted on Blue Label
shareholders. As the financial effects are unaudited and pro forma in nature, they may
not give a true reflection of the actual financial effects of the Acquisition. The unaudited
pro forma financial effects are the responsibility of the directors of Blue Label.
Before the After the % Change
acquisition acquisition
(cents) (cents)
Earnings per share 64.22 67.79 5.56%
Diluted earnings per share 63.19 66.71 5.57%
Headline earnings per share 64.17 67.31 4.89%
Diluted headline earnings per share 63.14 66.23 4.89%
Core earnings per share 66.13 71.16 7.61%
Weighted average number of shares ('000) 661,578 661,578
Diluted weighted average number of shares ('000) 672,305 672,305
Number of shares in issue (‘000) 674,509 674,509
Notes to the unaudited pro forma financial effects:
1. The Before the Acquisition column reflects the earnings, diluted earnings,
headline earnings, diluted headline earnings and core earnings per share based
on the audited consolidated financial statements of Blue Label for the year ended
31 May 2013.
2. The After the Acquisition column is based on the audited consolidated financial
statements of Blue Label for the year ended 31 May 2013 and the financial
results of RMCS for the 12 months ended 31 May 2013 based on its
management accounts for that period.
3. The effects on earnings, diluted earnings, headline earnings, diluted headline
earnings and core earnings per Blue Label share are based on the following
assumptions:
a. the Acquisition was effective 1 June 2012;
b. The imputation of the forfeiture of finance income of R12,14 million net of
taxation on the initial payment.
c. The amortisation of R9,67 million net of taxation on intangible assets
raised in terms of IFRS 3 (R): Business Combinations. This amortisation
is provisional in that finality will only be determined shortly after the
closing date. Shareholders will be advised should there be material
changes.
d. All adjustments are expected to have a continuing effect.
e. the costs relating to the Acquisition, which are once-off in nature, have not
been included in the calculation as they are not considered to have a
significant impact.
4. Core earnings per share is calculated after adding back the amortisation on
intangible assets raised in terms of IFRS 3 (R) Business Combinations. Core
earnings per share represents the effective financial performance of the group
and represents the base on which management will measure future growth.
5. The effects on net asset value and tangible net asset value have not been
disclosed as the effect is not considered to be significant.
7. CATEGORISATION OF THE ACQUISITION
The acquisition has been categorised as a category 2 transaction in terms of section
9.5(a) of the JSE Listings Requirements.
Johannesburg
24 December 2013
Investment Bank and Sponsor: Investec Bank Limited
Date: 24/12/2013 10:30:00 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.
Sharenet Sites 
