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Acquisition of KBC Holdings (Pty) Limited 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” or “the Group”)
ACQUISITION OF KBC HOLDINGS (PTY) LIMITED AND WITHDRAWAL OF CAUTIONARY
ANNOUNCEMENT
1 INTRODUCTION
The board of directors of Workforce is pleased to advise that the Company has entered into a sale of
shares agreement to acquire the entire issued share capital (“Sale Shares”) of KBC Holdings
Proprietary Limited (“KBC Holdings”) from Graham Mark Emmett, Yireh Investment Trust and Tad
Hartman Trust (“the Sellers”) for a maximum total purchase consideration of R47 000 000 (“the
Acquisition”).
2 NATURE OF THE BUSINESS OF KBC HOLDINGS
Through its wholly owned subsidiary, KBC Health & Safety (Pty) Ltd (“KBC”), KBC Holdings is involved
in the provision of induction training, Safety Health and Environmental training, contractor on-boarding
services and contractor management, primarily to the mining and minerals sectors, where KBC enjoys
meaningful market share and brand equity.
KBC trains approximately 100 000 contractors annually through its 12 training centres situated
throughout South Africa, and is the supplier of choice to many blue chip mining houses, whilst also
rendering its services to other industries.
3 RATIONALE FOR THE ACQUISITION OF KBC HOLDINGS
The Acquisition is pursuant to Workforce’s stated strategy of growing and developing its various
business segments, such as training, through the acquisition of market leading businesses comprising
of quality assets, underpinned by strong management teams, that share Workforce’s entrepreneurial
culture and values.
KBC complements the Group’s existing technical training offerings and its Temporary Employment
Services business that provides contract workers to a wide range of industries. It is anticipated that
the Acquisition will give rise to cross selling opportunities within the mining industry and other
industries that require contractors to be compliant with relevant health and safety legislation.
4 EFFECTIVE DATE OF THE ACQUISITION
The effective date of the Acquisition is 1 January 2017 (“Effective Date”).
5 PURCHASE CONSIDERATION
5.1. The purchase consideration payable by the Company to the Sellers in respect of the Sale Shares
is a maximum amount of R47 000 000 and will be paid as follows:
5.1.1. R22 546 740 in cash, payable 14 days after the first business day following the
fulfilment or waiver, as the case may be, of the conditions precedent as set out
in paragraph 6 below;
5.1.2. Earn-out payments comprising:
5.1.2.1. a maximum amount of R7 515 580, based on an agreed formula,
payable in cash 30 days after the finalisation of the audited financial
statements of KBC Holdings for the 12-month period ended
31 December 2017 (“the Second Payment”) and subject to the
achievement of profit after tax (“PAT”) of between R5 357 000 and
R7 133 000 (“First Year PAT”). No amount will be payable should
the PAT be less that R5 357 000.
5.1.2.2. a maximum amount of R7 515 580, based on an agreed formula,
payable in cash 30 days after the finalisation of the audited financial
statements of KBC Holdings for the 12-month period ended 31
December 2018 (“the Third Payment”) and subject to the
achievement of PAT of between R6 069 000 and R8 670 000
(“Second Year PAT”). No amount will be payable should the PAT
be less that R6 069 000.
5.1.2.3. In the event that the Second Payment is less than R7 515 580, but
the aggregate of First Year PAT and Second Year PAT is greater
than or equal to R15 803 000, the unpaid portion of the Second
Payment will become payable to the Sellers, as a top up payment,
along with the Third Payment.
5.1.3. An Agterskot Payment, limited to a maximum amount of R9 422 100,
calculated at R4.47 for every R1.00 that the aggregate of First Year PAT and
Second Year PAT exceeds R16 830 000. The Agterskot Payment will be made
in cash along with the Third Payment.
5.2 The Acquisition is being funded out of existing cash facilities.
6 CONDITIONS PRECEDENT
6.1 In addition to the conditions precedent which are normal in transactions of this nature, including
the conduct of a due diligence investigation which has been satisfactorily concluded, the following
conditions precedent to the Acquisition remain outstanding and are required to be concluded by
31 January 2017:
6.1.1 Delivery by the Sellers to the Company of the Effective Date accounts;
6.1.2 The conclusion of a key employment, restraint and confidentiality agreement with
Graham Mark Emmett;
6.1.3 The approval of the boards of directors of both Workforce and KBC Holdings; and
6.1.4 Compliance with any statutory and/or regulatory requirements applicable for the
conclusion and/or implementation of the Acquisition.
7 FINANCIAL INFORMATION
The value of the net assets acquired as at the financial year ended 29 February 2016 was
approximately R14.7 million and the profit after tax attributable to the net assets that are the subject
of the Acquisition for the year ended 29 February 2016 was approximately R4.9 million.
8 CLASSIFICATION OF THE ACQUISITION
The Acquisition is classified as a Category 2 transaction in terms of the Listings Requirements of the
JSE Limited.
9 WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT
Shareholders are referred to the cautionary announcement dated 14 December 2016 and are advised
that following the release of this announcement, caution is no longer required to be exercised when
dealing in the Company’s securities.
10 FURTHER ANNOUNCEMENT
Shareholders will be notified once the last of the conditions precedent has been fulfilled or waived and
the Acquisition becomes unconditional.
Johannesburg
12 January 2017
Designated Adviser
Merchantec Capital
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