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Acquisiton of 75% of the share capital of Via Media
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”)
ACQUISITION BY BLUE LABEL TELECOMS LIMITED (“BLT”) OF 75% OF THE SHARE
CAPITAL OF VIA MEDIA PROPRIETARY LIMITED (“VIA MEDIA”)
1. INTRODUCTION
The shareholders of BLT are advised that it has entered into an agreement with Malik
Investment Holdings Proprietary Limited , the sole shareholder of Via Media, in terms
of which BLT will acquire 75% of its shareholding in Via Media.
2. NATURE OF THE BUSINESS
Via Media is a mobile content and value-added services provider. Its technology
platform connects to all South African Mobile Networks, offering the best of breed in
mobile services. These include Mobile Terminate and originate and premium rated
SMS’s, Online Billing, Multimedia Messaging, WAP and Web services, Unstructured
Supplementary Services Data and Interactive Voice Response.
Via Media offers its partners the ability to sell mobile entertainment, information and
communication services to consumers through a variety of media and technology
channels.
3. RATIONALE FOR THE ACQUISITION
The acquisition of Via Media affords BLT access to new channels for the distribution
of both Via Media and BLT products and services.
4. SALIENT TERMS OF THE ACQUISITION
4.1 BLT will acquire 75% of the issued share capital of Via media.
4.2 The purchase consideration is the sum of R144,375,000 (“initial payment”) plus
additional amounts totalling up to R103,125,000 if warranted profits are achieved
by Via Media during a 36 month warranty period . The additional amounts will be
payable as follows:
4.2.1 Year 1: R24,062,500
4.2.2 Year 2: R24,062,500
4.2.3 Year 3: R55,000,000
4.3 If the warranted profits are not achieved, the above payments will be abated on a
pro-rata basis. If, however, the warranted profits fall below an agreed threshold,
BLT will have the right to put its shares to the vendors for a refund of all payments
made plus interest thereon.
4.4 An additional R112,500,000 or part thereof will be payable if stretched targets are
achieved. These targets are over and above the warranted accumulated profits
over the warranty period.
4.5 The purchase consideration will be funded through the Group’s cash resources.
5. CONDITIONS PRECEDENT TO THE ACQUISITION
All conditions precedent have been fulfille
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. The unaudited pro forma financial effects have been
prepared for a six month period and are based on BLT’s unaudited results for the six
months ended 30 November 2013 and Via Media’s management accounts for the six
months ended 30 November 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 and the six months ended 30 November 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 and position of a Blue Label shareholder and,
because of their nature, 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 BLT.
Before the After the
acquisition acquisition
(cents) (cents) % Change
Earnings per share 37.17 39.24 5.57%
Diluted earnings per share 36.66 38.70 5.56%
Headline earnings per share 37.15 39.21 5.55%
Diluted headline earnings per share 36.63 38.67 5.57%
Core earnings per share 37.89 40.60 7.15%
Net tangible asset value per share 381.23 353.65 -7.23%
Weighted average number of shares ('000) 662,704 662,704
Diluted weighted average number of shares ('000) 672,015 672,015
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, core earnings and net tangible asset value per
BLT share based on the unaudited consolidated financial statements of BLT for the
six months ended 30 November 2013.
2. The After the acquisition column is based on the unaudited consolidated financial
statements of BLT for the six months ended 30 November 2013 and the financial
results of Via Media for the six months ended 30 November 2013 based on its
management accounts for that period.
3. The effects on earnings, diluted earnings, headline earnings, diluted headline
earnings, core earnings and net tangible asset value per BLT share are based on the
following assumptions:
a. the acquisition was effective 1 June 2013;
b. The imputation of the forfeiture of finance income of R3.1 million net of
taxation on the initial payment.
c. The amortisation of R4.3 million net of taxation and non-controlling interest 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 any material
changes in this regard.
d. Imputed finance costs of R3.8 million relating to the present value of the
additional purchase consideration of R103,125,000 over 36 months if the
warranted profits are achieved.
e. Via Media’s financial results for the six months ended 30 November 2013
have been amended to exclude a management fee of R7.7 million net of
taxation, as this is a non-recurring expense.
f. All adjustments are expected to have a continuing effect.
g. The professional 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 are calculated after adding back the amortisation on
intangible assets raised in terms of IFRS 3 (R): Business Combinations. Core
earnings per share represent the effective financial performance of the Group and
the basis on which management will measure future growth.
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
11 August 2014
Sponsor: Investec Bank Limited
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