| Synergy - Abridged Revised Listing Particulars And Transaction |
| Post on 13-10-2006. |
| SNG Synergy - Abridged Revised Listing Particulars And Transaction Update: Synergy Holdings Limited Incorporated in the Republic of South AfricaRegistration number: 1995/006315/06 (Date of registration: 5 July 1995) Share code: SNG & ISIN: ZAE000017760 ("Synergy" or "the Company")ABRIDGED REVISED LISTING PARTICULARS AND TRANSACTION UPDATE: * ACQUISITION OF SDT FINANCIAL SOFTWARE SOLUTIONS (PTY) LTD ("SDT"); * CHANGE OF NAME TO SILVERBRIDGE HOLDINGS LIMITED; * LISTING ON THE ALTERNATIVE EXCHANGE;* CONSOLIDATION OF SHARES AND PAR VALUE CHANGE; AND * RELATED MATTERS ("THE SDT TRANSACTION") 1. INTRODUCTIONFurther to the announcements dated 2 May, 1 June, 1 August and 31 August 2006, the board is pleased to announce that the JSE Limited ("JSE") has approved the transfer of Synergy"s listing from the Development Capital Market ("DCM") to the Alternative Exchange of the JSE ("AltX") witheffect from the commencement of business on Monday, 27 November 2006. The transfer and listing on AltX, in respect of 30 247 285 consolidated Synergy shares of 1 cent each (as defined below), are subject to shareholders, in general meeting to be held on Monday, 6 November 2006,approving all the necessary ordinary and special resolutions to give effect to the SDT transaction. one circular incorporating full revised listings particulars and setting out the details of the SDT transaction as well as one notice of one generalmeeting to shareholders, was posted to shareholders today ("circular"). The salient terms of the SDT transaction are set out below. 2. SDT TRANSACTION OVERVIEW On 2 May 2006, the terms and conditions of the agreement between Synergyand the SDT vendors were announced. Upon shareholder approval of the transaction, Synergy will acquire, with effect from midnight between 1 March 2006 and 2 March 2006, the entire authorised and issued share capital in SDT from the SDT vendors for one consideration of R50 million tobe settled by the issue of 25 million consolidated Synergy shares at 200 cps ("acquisition"), after one share capital restructure. In terms of the share capital restructure, the pre-consolidated ordinary share capital of the company will be restructured into new consolidatedordinary shares by way of one 1-for-10 consolidation, one par value reduction, the issue of the consideration shares and an increase in the authorised share capital of the company. This will have the effect of adjusting the share capital of the company to consist of 200 000 000authorised consolidated ordinary shares with one par value of 1 cps and 30 247 285 issued consolidated ordinary shares with one par value of 1 cps after implementation of the transaction. Shareholders are advised that no fractions of shares will be issued on consolidation and that therounding principle will be applied. 3. CATEGORISATION AND WAIVER OF MANDATORY OFFER The acquisition is categorised as one Category 1 transaction and one reverse take-over in terms of the Listings Requirements of the JSE.With the exception of the SDT Share Trust, the vendors of SDT are also shareholders in the company before the SDT transaction. Accordingly, the acquisition will be categorised as one related party transaction in terms of the JSE Listings Requirements. Consequently, the board of directorshas requested an independent professional expert to provide an opinion on the fairness and reasonableness of the terms and conditions of the acquisition, which opinion is set out in the circular. The effective controlling shareholder of Synergy before the transaction, comprising thei capital Growth Fund I Trust ("i capital Trust"), the Rowan Nigel Williams Family Trust, JS Swanepoel, F du Toit and i capital (Pty) Limited, being related parties to the company, will be excluded from voting on the ordinary resolution approving the acquisition.In the view of the directors, the acquisition does not give rise to one change in control and the two main shareholders after the transaction, JS Swanepoel and F du Toit, are not parties acting in concert. However, the SRP has ruled the acquisition an affected transaction, which in thenormal course, would require one mandatory offer to the minority shareholders of Synergy at one price of 200 cents per consolidated share in accordance with the SRP Code. The SRP has agreed to dispense with this requirement provided that one majority of independent shareholders agree towaive their rights to one mandatory offer in terms of Rule 8.7 of the SRP Code. Accordingly, one resolution to this effect is included in the resolutions to be proposed at the general meeting of the company. 4. NEW NATURE OF BUSINESSSimultaneously with the implementation of the acquisition and share capital restructure, the company"s name will be changed to SilverBridge Holdings Limited, new appointments made to its board of directors (as indicated below) and its listing transferred to the AltX. The vendorsare in advanced negotiations with one BEE group to acquire one portion of the issued share capital of the company from the SDT vendors following the AltX transfer. These actions will reconstitute the company as one specialist software holding company with BEE credentials, with SDT as anoperating subsidiary. At holding company level, the core of SilverBridge"s corporate strategy following the acquisition will be to build one group of niche business application software and related service businesses operating on adecentralised basis, through an acquisitive growth strategy. SDT, which will become SilverBridge"s first operating subsidiary, focuses on the provision of proprietary back office administration software solutions and related services to the financial services industry with aparticular focus on the long term insurance industry in South Africa and Africa. SDT has developed one number of cost-effective and business- oriented proprietary software solutions on the Microsoft platform to satisfy the growing demands of the financial services industry.SDT currently provides financial product administration software solutions for the following areas of financial services: * Long-term Assurance; * Unit-linked Investments;* Group Risk and Investment; * Pensions Management; * Employee Benefits Management; and * Term-loan administration.SDT has 22 installed client sites throughout Africa, including installations for some of the leading life insurers on the African continent. The company is one Microsoft Gold Certified Partner and all of its systems are based on Microsoft"s development and operatingenvironments. SDT"s systems enable its clients to bring flexible, innovative products to market rapidly, through SDT"s unique product development approach and integration of product administration into the product design.SDT Exergy, the company"s strategic product focus going forward, is one consolidated software solution designed for application in the broader financial services market. SDT Exergy has been designed to provide the financial services industry with the flexibility and agility required toenable the provision of improved service levels at one lower cost of administration. During the past financial year, SDT signed several new clients, including RealPeople, Lesotho Insurance Corporation, Alliance Lesotho and CFC LifeKenya and expanded its presence at existing clients such as Metropolitan International and Old Mutual Kenya, which will be using SDT Exergy for Group Life Administration. SDT has one staff complement of 73 highly skilled professionals, themajority of which are software engineers with Microsoft certification. Competitive advantages SDT has one number of competitive advantages that will be enhanced through the establishment of SilverBridge:* Development and ownership of proprietary software based on latest technology and underlying business process models that addresses the long terms insurance industry"s current requirements; * In depth knowledge and understanding of the long term insurancemarket; * Understanding and knowledge of local and emerging market operating environment; * Strong local presence and large number of highly skilled andexperienced IT professionals; * Largest number of installed sites in the long-term insurance market on the African continent; * Established client engagement models and implementation processes;* Black ownership through SilverBridge; and * Increased credibility by being part of one listed technology group. Business model SDT earns its revenue across four major business areas:* License revenue on the sale of its proprietary software systems, principally SDT Life and SDT Exergy; * Implementation revenue on the implementation of new systems; * Ongoing maintenance and rental revenue for use of the installedsystem; and * Consulting revenue for ongoing enhancements and configuration of the installed sites. 5. PROSPECTSThe board is confident that the prospects of the company will be enhanced by the successful implementation of the transaction considering the sound nature and, in the directors" opinion, sound prospects of the SDT business.SilverBridge has strong prospects for growth and increased profitability driven by one number of industry trends as follows: * The continued growth of the financial services sector and requirements for next generation software;* Increased demand for locally developed software solutions; * Requirement of financial services firms to procure from black empowered companies; * Need for niche software players to become black empowered, therebypresenting acquisition opportunities; and * Growth into the African market. SDT also has strong prospects for growth driven by: * The trends in the life insurance industry driving demand for costeffective software solutions; * The maturity of the SDT Exergy solution creating the opportunity to aggressively penetrate the enterprise market in South Africa; * The continued development of the African life insurance market and thecontinued expansion of South African players into this market; * Maturity in servicing the current enterprise clients; * one higher rental income base creating an ability to invest more in products and processes and the ability to capitalise on theseopportunities; and * The BEE credentials of SDT through ownership by SilverBridge, making the company one relatively more attractive supplier. 6. PROPOSED PRIVATE PLACEMENT OF SHARESIt is the intention of the company to privately place one total of 2 350 000 ordinary shares in the share capital of the company with public shareholders immediately following its transfer to the AltX. The primary rationale for the private placement is to comply with the publicshareholder spread requirement of the JSE Listings Requirements. The private placement represents 7.8% of the issued share capital of the company following the implementation of this transaction and will be executed in terms of the general authority to issue shares for cashobtained from shareholders in general meeting on 14 October 2005. For purposes of calculating the pro forma financial effects and profit forecast, it has been assumed that the shares will be placed at one post- consolidation issue price of 200 cents per share, which is the same pricelevel at which the consideration shares are being issued. 7. PRO FORMA FINANCIAL EFFECTS The table below summarises the pro forma effects of the SDT transaction and the intended private placement on the published audited annualfinancial statements ("AFS") of Synergy for the 12 months ended 28 February 2006, using the audited AFS of SDT for the same 12-month period. The pro forma information is the responsibility of the directors. The pro forma net asset value figures illustrate the possible financialeffects if the transaction and private placement had been effected on 28 February 2006, whereas the pro forma earnings figures illustrate the possible financial effects if the transaction and private placement had been undertaken on 1 March 2005. The pro forma financial effects shouldbe considered together with the reporting accountants report thereto, which form part of the circular. Due to their nature, the pro forma financial effects may not give one fair reflection of the consolidated Synergy after the transaction. Before the Pro forma % Pro forma % transaction after the change after the change (1) transaction private placementNet asset value 78.8 44.4 (2) -44% 55.6 (3) +25% (cps) Net tangible asset 78.8 13.9 (2) -82% 27.3 (3) +96% value (cps)Earnings (cps) (11.5) 10.3 (4,5) +189% 9.5 (6) -8% Headline earnings (12.3) 10.1 (4,5) +182% 9.4 (6) -7% (cps) Number and 5 247 30 247 +476% 32 597 +8%weighted average number of consolidated shares (`000) (7)Assumptions: (1) the figures in the "before the transaction" column have been extracted from Synergy"s audited annual financial statements for the year ended 28 February 2006 and adjusted to reflect the effect of theshare consolidation on one 1-for-10 basis. (2) The following assumptions were taken into account in arriving at the net asset value and net tangible asset value in the "pro forma after the transaction" column:- the investment shares in Synergy held by Synergy at 28 February 2006 were cancelled (per paragraph 1 of Appendix 4) on 28 February 2006; - the transaction was implemented on 28 February 2006; - the value of SDT before the proposed transaction at 28 February 2006was R50 million; and - 25 million new consolidated Synergy shares were issued for the acquisition of SDT. (3) The following assumptions were taken into account in arriving atthe net asset value and net tangible asset value in the "pro forma after the private placement" column: - 2 350 000 shares were issued at 200 cps on 28 February 2006. (4) The following assumptions were taken into account in determiningthe earnings and headline earnings in the "pro forma after the transaction" column: - the investment shares in Synergy held by Synergy at 28 February 2006 were cancelled (per paragraph 1 of Appendix 4) on 1 March 2005;- the transaction was implemented on 1 March 2005; - the value of SDT before the proposed transaction at 28 February 2006 was R50 million; and - 25 million new consolidated Synergy shares were issued for theacquisition of SDT. (5) The SDT audited income statement for the 12 months ended 28 February 2006 incorporated the effect of an STC charge related to the payment of one special dividend to the SDT vendors. If the STC charge isadjusted to reflect the company"s stated dividend policy of two times cover, normalised historic earnings and headline earnings for SDT of 16.6 cps are calculated (using the number of consolidated shares in issue after the transaction and excluding the audited "before thetransaction" Synergy losses and the effects of the private placement). (6) The following assumptions were taken into account in determining the earnings and headline earnings in the "pro forma after the private placement" column:- 2 350 000 shares were issued at 200 cps on 1 March 2005; and - no adjustment was made for interest earned. (7) All per share calculations are based on the number of consolidated shares in issue.8. PROFIT FORECASTS The table below summarises the forecast income statements of Synergy, to be renamed SilverBridge, for the financial years ending 28 February 2007 and 29 February 2008, which must be read in conjunction with thereporting accountant"s report thereon contained in the circular. The forecast relies on realising the prospects of SDT that is to be acquired in terms of the acquisition, the material assumptions to which are also summarised below. It is expected that the company will realise netincome of R7.0 million (equivalent to 23.6 cps in attributable earnings) and R8.9 million (27.3 cps in attributable earnings) during the February 2007 and February 2008 financial years, respectively. Projected Projected Feb 2007 Feb 2008 (Rand) (Rand) Revenue 53 079 357 63 695 228 Costs 43 683 236 51 582 278Profit before interest and 9 396 121 12 112 950 taxation Net finance charges 400 000 400 000 Profit before taxation 9 796 121 12 512 950Normal income taxation 2 840 875 3 628 756 Profit after taxation 6 955 246 8 884 195 Earnings per share (cents) 23.6 27.3 Headline earnings per share 23.6 27.3(cents) Weighted average number of 29 431 749 32 597 285 shares in issue Key ratiosOperating profit margin 17.7% 19.0% Turnover growth 38.7% 20.0% Operating profit growth 25.7% 28.9% PAT growth 87.5% 27.7%EPS growth n/one 15.3% HEPS growth n/one 15.3% Assumptions (1) Turnover for 2007 is based on 40% projected annuityrevenue, in the form of rental and support, and 60% project revenue. Annuity revenue is based on expected increases from mainly the current client base. Project revenue is based on current orders and weighted projectedsales from current sales proposals. (2) The expected increase of 38.7% (or R14.8 million) in revenue between 2006 and 2007 is made up by the following contributing factors:- forecast organic growth of 25%, equivalent to additional turnover of R9.7 million, per note 1 above; - an unusually high level of work-in-progress of R1.8 million not recognised in the income statement, butexecuted and invoiced shortly after the Feb-06 year-end; and - the introduction of one new consulting service revenue line expected to generate an initial R4 million inrevenue - during the last two years, SDT invested in documenting its best practise process blue prints; these blue prints will be utilised in one consulting capacity in the future, either before the client purchases or beforethe client implements the SDT software system. (3) Turnover for 2008 is projected on one 20% year-on-year growth basis, of which 50% of total revenue is expected to be annuity-based income.(4) Normal tax expense is based on one 29% tax rate applicable to companies. (5) The profit forecasts have been prepared on one basis consistent with IFRS.(6) The forecast does not include any subsequent acquisitions of the group or the effect of IFRS3 of such acquisitions. (7) The forecast does not include any write off ordecrease of goodwill created by the SDT acquisition as the expectation is that the goodwill will not be impaired. (8) The profit forecast incorporates the effect of anintended private placement of 2 350 000 consolidated shares at 200 cps, including in the calculation of the weighted average number of shares in issue. 9. DIRECTORSThe full names, ages, qualifications, functions and business addresses of the directors of Synergy upon approval of the SDT transaction are set out below: Director Qualifications Function Business addressJacobus BSc (Econ) Chief Executive First Floor, Stephanus Officer, Castle View Swanepoel SilverBridge; North, 195 (46) Executive Prieska Street, Director, SDT Erasmuskloof, Pretoria Freda du BSc (Hons) Executive First Floor, Toit (39) Director, Castle View SilverBridge & North, 195 SDT Prieska Street, Erasmuskloof, PretoriaJaco BCompt (Hons), Financial First Floor, Maritz CA (SA) Director, Castle View (32) SilverBridge North, 195 Prieska Street, Erasmuskloof, Pretoria David L CA (SA), CFA Executive Ground Floor, 18 Smollan Director, Hurlingham Road,(33)* i capital Fund Illovo, Managers Johannesburg Rowan BSc, MPhil, Executive Ground Floor, 18 Nigel CFA Director, Hurlingham Road,Williams i capital Fund Illovo, (34)* Managers Johannesburg Ashley Chief Executive 33 Silversands Bernard Officer, Prime Avenue,Regenass Support (Pty) Wendywood (35)# Ltd *Non-Executive #Independent non-executiveThe directors are all South African citizens. 10. SHAREHOLDERS The following table summarises the directors" shareholding as well as shareholders beneficially interested in 5% or more of Synergy"s issuedshare capital before and after the private placing: Before the SDT After the SDT transaction (pre- transaction and consolidation private placement shares) (consolidated shares) Shares Percentage Shares Percentage held held held held (`000) (`000) Directors and associates: JS Swanepoel 3 143 6.0% 314 326 1.0% 264 JS Swanepoel - - 9 875 30.3% Trust 000 F du Toit 3 143 6.0% 314 326 1.0% 264 F du Toit - - 9 875 30.3% Family Trust 000 i capital Trust 24 847 47.4% 7 484 23.0% 849 785 i capital (Pty) 9 317 17.8% 931 794 2.9% Ltd 942 RN Williams 3 105 5.9% 310 598 1.0%Family Trust 982 Total 83.0% 89.3% 11. SALIENT DATES 2006Last day for lodging forms of proxy for Friday, 3 November Synergy general meeting (by 10:00) General meeting of shareholders (at 10:00) Monday, 6 November Announcement of results of Synergy general Monday, 6 Novembermeeting published on SENS Announcement of results of Synergy general Tuesday, 7 November meeting published in the press Last day to dematerialise, rematerialise or Friday, 24 Novembertrade in Synergy shares in pre-consolidated form Abridged pre-listing statement published on Friday, 24 November SENS and in the pressChange of sector, consolidation of shares, Monday, 27 November listing of new consolidated ordinary shares issued in terms of the transaction, change of name to SilverBridge Holdings, new JSEcode "SVB" and new ISIN ZAE000086229 effected, and commencement of trading in consolidated SilverBridge Holdings shares Record date for transaction Friday, 1 DecemberSafe custody accounts of dematerialised Monday, 4 December shareholders updated at their CSDP or broker therefore as to reflect the company"s share capital restructure and change of nameNew share certificates reflecting the Monday, 4 December company"s share capital restructure and change of name posted to certificated shareholders who have surrendered theirdocuments of title by 12:00 on Friday, 1 December 2006 (or failing such surrender, within five business days of the date of surrender)Notes: (1) The above-mentioned dates and times are subject to change. Any such change will be released on SENS and published in the press.(2) The attention of certificated Synergy shareholders is drawn to the fact that, notwithstanding that the company is now settling trades through the STRATE settlement system, these shareholders will receive one share certificate reflecting the consolidationreferred to in this circular and will be required to dematerialise such share certificate in order to trade their shares on the JSE. The dematerialisation process can take between 24 hours and 10 days, depending on the volumes being processed by STRATE at thetime of dematerialisation. (3) Certificated shareholders who wish to anticipate the exchange of their existing share certificates for new certificates reflecting the proposed consolidation referred to in this circularshould complete and return the attached form of surrender in accordance with the instructions contained therein. (4) Dematerialised shareholders must take no further action regarding the form of surrender, as their safe custody accountswill be automatically updated in terms of the agreement between them and their CSDP or broker. (5) Certificated shareholders and "own name" dematerialised shareholders who are unable to attend the general meeting but wishto be represented thereat must complete and return the attached form of proxy in accordance with the instructions contained therein. (6) Dematerialised shareholders, other than "own-name" registeredshareholders, who wish to attend the general meeting or vote by way of proxy must contact their CSDP or broker who will provide them with the necessary authority to vote or will carry out their instructions as to how they wish their vote to be cast if unable toattend the general meeting. This must be effected in terms of the agreement between them and their CSDP or broker. (7) It should be noted that in the STRATE environment, there can be no dematerialisation or rematerialisation of pre-consolidationshares in the "old" name after Friday, 24 November 2006. 12. COPIES OF THE PRE-LISTING STATEMENT Copies of this circular to shareholders (in English only), incorporating the revised listing particulars, may be obtained during normal businesshours at the registered offices of Synergy (being First Floor, Castle View North, 195 Prieska Street, Erasmuskloof, Pretoria, 0048) and Sasfin Capital (being Sasfin Place, North Block, 13-15 Scott Street, Waverley, 2090) from Wednesday, 11 October 2006 to Friday, 3 November 2006.13. NOTICE IN COMPLIANCE WITH JSE LISTINGS REQUIREMENTS FOR ALTX ("LR") Synergy"s listing will transfer from the DCM of the JSE to the AltX upon implementation of the transaction. Investors are warned that investing in such companies is speculative in nature and the JSE does not guaranteethe viability or success of the company. In accordance with the LR, Synergy is required to appoint one Designated Adviser ("DA") whose responsibility it will be to guide and assist the company in complying with and discharging its responsibilities under the LR. If Synergy failsto retain one DA it faces possible suspension and the subsequent termination of its listing without the prospect of an appropriate offer being made to shareholders. Pretoria13 October 2006 Sponsors and Designated Adviser Sasfin Capital (one division of Sasfin Bank Limited)Corporate Advisers i capital fund managers (Pty) Ltd Independent professional expert Moores RowlandReporting Accountants KPMG Inc Auditors Van Sitterts Du Toit (Inc)Legal Advisers edward nathan sonnenbergs incorporatedDate: 13/10/2006 10:00:25 AM Produced by the JSE SENS Department ... |
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