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Acquisition of Quyn and Withdrawal of Cautionary Announcement
Workforce Holdings Limited
Incorporated in the Republic of South Africa
(Registration number 2006/018145/06)
Share code: WKF ISIN: ZAE000087847
(“Workforce” or “the Company”)
ACQUISITION OF QUYN AND WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT
1. INTRODUCTION
Further to the ‘Cautionary Announcement’ dated 14 October 2015 and subsequent ‘Renewal of Cautionary
Announcements’ dated 30 November 2015 and 14 January 2016, the board of directors of Workforce (“the
Board”) is pleased to inform shareholders that Workforce has entered into an agreement with Quintonox
Investments Proprietary Limited (“Quintonox” or “the Seller”) to acquire the entire share capital and
claims in:
- Quyn International Outsourcing Proprietary Limited, Quyn Payroll Services Proprietary Limited, Quyn
HR Consulting Proprietary Limited, Molapo Quyn Outsourcing Proprietary Limited; and
- Sizuluntu Staffing Solutions Proprietary Limited (“Sizuluntu”) (save for the shares held by the Broad-
Based Black Economic Empowerment shareholders in Sizuluntu),
collectively referred to hereinafter as “Quyn”, from Quintonox subject to the conditions set out in paragraph
2.4 below (“the Acquisition”).
2. THE ACQUISITION
2.1 Nature of the business Quyn
Established in 1988, Quyn offers its clients, both local and international, a range of outsourced staff
related services including temporary employment solutions, payroll administration and management,
HR and IR consulting and permanent placements.
2.2 The rationale for the Acquisition
Quyn’s expertise, which is the provision of technical skills to its clients across a wide range of
industries, represents diversification for Workforce, which operates predominantly in the non-technical
labour segment. The combined entities will allow for the achievement of economies of scale,
optimisation of operations and access to Workforce’s working capital will expedite Quyn’s growth.
Additionally, Quyn’s existing client base will allow Workforce to cross sell its range of diversified human
capital related services to these clients.
2.3 Effective date and purchase consideration
The effective date of the Acquisition is 1 February 2016 (“Effective Date”).
The total amount payable by Workforce to the Seller as consideration for the Acquisition is R75 million
(“Purchase Consideration”) payable in cash and will be discharged in six tranches as follows:
2.3.1 an amount of R30 million by no later than 15 February 2016;
2.3.2 an amount of R6.25 million after a period of three months from the Effective Date;
2.3.3 an amount of R6.25 million after a period of six months from the Effective Date;
2.3.4 an amount of R6.25 million after a period of nine months from the Effective Date;
2.3.5 an amount of R18.75 million after a period of 12 months from the Effective Date; and
2.3.6 an amount of R7.5 million after a period of 24 months from the Effective Date.
The Purchase Consideration is based upon the achievement by Quyn of an audited Profit Before
Interest and Tax (“PBIT”) of R15 million for the year ending 29 February 2016. In the event that PBIT
for the 12 month period ending 29 February 2016 is lower than R14.5 million, the Purchase
Consideration will be reduced by R5 for every R1 shortfall in PBIT below R15 million.
Furthermore, the Purchase Consideration will be reduced by the value of any Accounts Receivable
balances, as warranted by the Seller, that are unpaid after 90 days from the Effective Date. Workforce
will have the right to put any such uncollected Accounts Receivable balances back to the Seller who
will be required to pay the value thereof to Workforce within 14 days of such put.
2.4 Conditions precedent
In addition to the conditions precedent as are normal in transactions of this nature, including the
conclusion of a due diligence investigation which will be performed to the satisfaction of Workforce,
the following relevant conditions precedent to the Acquisition are disclosed:
2.4.1 the signature of a Sale of Shares Agreement between the Seller and Workforce containing the
various clauses and warranties as are normal and usual in a transaction of this nature and
incorporating the aforementioned terms; and
2.4.2 the signature of service agreements with all key Quyn personnel.
3. THE VALUE OF, AND PROFITS ATTRIBUTABLE TO, THE NET ASSETS OF QUYN
The value of the net assets that are the subject of the Acquisition as at 28 February 2015 was R31.4
million. The profit before interest and tax attributable to the net assets that are the subject of the Acquisition
for the year ended 28 February 2015 was R27.9 million.
4. CLASSIFICATION OF THE ACQUISITION
The Acquisition is classified as a Category 2 transaction in terms of the Listings Requirements of JSE
Limited.
5. WITHDRAWAL OF CAUTIONARY
Following this announcement, shareholders are advised that the cautionary is withdrawn and shareholders
are no longer required to exercise caution when dealing in the Company’s securities.
Johannesburg
21 January 2016
Corporate and Designated Adviser
Merchantec Capital
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