4SIGHT HOLDINGS LIMITED - Acquisition of 51% of Strategix Application Solutions Proprietary Limited

Acquisition of 51% of Strategix Application Solutions Proprietary Limited

4SIGHT HOLDINGS LIMITED
(Incorporated in the Republic of Mauritius)
(Registration number: C148335 C1/GBL)
(“4Sight Holdings” or “the Company”)
ISIN Code: MU0557S00001 JSE Code: 4SI


ACQUISITION OF 51% OF STRATEGIX APPLICATION SOLUTIONS PROPRIETARY LIMITED


1.   Introduction
     The board of directors of 4Sight Holdings is pleased to announce that the Company,
     through its wholly owned subsidiary Foursight Holdings Limited, has entered into an
     agreement and addenda thereto with Messrs J O’Brien (17%) and AS Venter (13%) and
     Strategix Business Solutions Proprietary Limited (70%), (“Vendors”) for the acquisition of 51%
     of the shares (on a pro rata basis) in Strategix Application Solutions Proprietary Limited
     (“Strategix”) (the “Acquisition”) with effect from 1 April 2018 (“Effective Date”). The
     Vendors are not related parties to 4Sight Holdings.

     Strategix will become a subsidiary of Foursight Holdings and will adhere to the provisions of
     paragraph 10.21 of Schedule 10 of the JSE Listing Requirements.

2.   Description of STRATEGIX
     STRATEGIX is a software development company that has digitized SHEQ solutions,
     integrated management systems, integrated business continuity management systems
     and occupational health and wellness management solutions as well as integrated
     environmental sustainability systems.

3.   Terms and conditions
     The aggregate purchase consideration will be paid primarily on an Earn-out basis
     (“Purchase Consideration”) in 4Sight Holdings shares as follows:

     3.1   Upfront issue of 1 500 000 4Sight Holdings shares, which 4Sight will endeavour to place
           on or before the 31 August 2018 at prevailing market prices, which amount will in turn
           be deducted from Earn-out Tranche 3;

     3.2   Earn-out Tranche 1, will be paid within 30 days of the notification by the auditors of
           the Net Profit After Tax (determined in accordance with IFRS (“NPAT”) on the 9 month
           period from the Effective date until 31 December 2018, calculated on the NPAT for
           the 12 month period starting 1 January 2018 until 31 December 2018 multiplied by a
           price : earnings ratio of 8 divided by 3. This value will be settled in 4Sight shares
           calculated at the date upon which such shares become payable;
     3.3   Earn-out Tranche 2, will be paid at the end of the 12 month period from 1 January
           2019 until 31 December 2019, calculated on the NPAT for the 12 month period
           multiplied by a price : earnings ratio of 8 divided by 3. This value will be settled in
           4Sight shares calculated at the date upon which such shares become payable; and

     3.4   Earn-out Tranche 3, will be paid at the end of the 12 month period from 1 January
           2020 until 31 December 2020, calculated on the NPAT for the 12 month period
           starting multiplied by a price : earnings ratio of 8 divided by 3, less the value of the
           1 500 000 shares placed on or before 31 August 2018 on behalf of the sellers. This
           value will be settled in 4Sight shares calculated at the date upon which such shares
           become payable;

     Of the above share issues, 4Sight will undertake to place 30% of such shares as a vendor
     placement at prevailing market prices at the time. The issue of shares will be limited to
     preclude a possible mandatory offer by the Sellers.

4.   Rationale for the Acquisition
     The Acquisition is in line with 4Sight Holdings’ acquisitive and organic growth strategy of
     acquiring industry 4.0 companies and provides the 4Sight Holdings group with the Digital
     Mine of the Future offering to mining companies around the globe, the digitization and
     automation of the Health and Safety and Environmental compliance environments is
     essential.

     Many mining companies follow a manual paper driven process to manage the above
     environment, without pro-active reporting and compliance.                Compliance and
     comprehensive reporting is becoming a key requirement for mining companies and
     provides an entry point for 4Sight Holdings, where the group can upsell additional services
     from other 4Sight Holdings subsidiaries, namely AGE, BluESP, SET, Cyber4.0 and Visualitics.

     The solution is also IOT enabled allowing real-time reporting and compliance.

     Strategix develops and continually improve the technology offering and OneSource
     provides the consulting, project implementation and training. The solution can be
     expanded to manage corporate risk through-out the organization. The solution works
     across vertical solutions and will be applied to many other market sectors.

5.   Conditions precedent
     The Acquisition is subject to the fulfilment of the following conditions precedent by no later
     than 30 April 2018:

     5.1   approval by the board of directors of 4Sight Holdings;

     5.2   the satisfactory outcome of a due diligence investigation into the business of
           Strategix and its subsidiaries;

     5.3   any regulatory or JSE approval, to the extent necessary; and
     5.4   Messrs O’Brien and Venter agreeing to be employed by Strategix for a period of at
           least two years from the Closing Date, and to be restrained from competing with
           Strategix within all the territories that make up Africa and all other countries in which
           4Sight Holdings operates, during the term of his employment, and for a period of two
           years after the date on which he ceases to be employed by Strategix.

6.   Financial information
     The financial information required in terms of the JSE Listings Requirements will be
     published on or before 30 April 2017 but is not considered to be material to the terms of
     the acquisition.

     The Vendors have provided a gross profit forecast for the periods ending 31 December
     2018, 31 December 2019 and 31 December 2020 as follows:

     Period                                                                    Gross profit forecast
     9 months ending 31 December 2018                                                   R1 904 820
     Year ending 31 December 2019                                                       R3 242 216
     Year ending 31 December 2020                                                       R4 796 616

     The forecasts are considered to be stretch targets and are considered optimistic. The
     forecasts have accordingly not been warranted by the Vendors.

7.   Classification of the transaction
     The Acquisition is classified as a Category 2 transaction in terms of the JSE Listings
     Requirements pertaining to companies listed on the Alternative Exchange of the JSE and
     thus shareholder approval is not required.

17 April 2018
Mauritius

Designated Advisor
Arbor Capital Sponsors Proprietary Limited

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