SIMEKA BUSINESS SOLUTIONS GROUP LTD has acquired 50% of Adcheck.

03-06-08
Shareholders are advised that Simeka has concluded an agreement in terms of which it gives effect to its mobile applications strategy by acquiring 50% of the shares in and claims on loan account against Adcheck (together, the "sale equity") from the current owners of Adcheck (the "vendors"), namely T B Ahier, A N Selsick, I A Hoffmann and D Woolnough (the "transaction"). Subject to fulfilment of the conditions set out below, the effective date of the transaction will be 1 April 2008.

BUSINESS OF ADCHECK AND RATIONALE FOR THE TRANSACTION
Adcheck is the leading South African provider of custom developed mobile applications. The applications are used by customers to automate their field force processes through "real time" data synchronization utilizing cellphone and/or other mobile platforms. The applications allow for better in field tracking, customer relationship management and field management, enabling Adcheck's customers to deliver quality service and/or sales through these mobile devices. Adcheck has more than seven years mobility development experience and prides itself in delivering true value-add solutions to its clients. The transaction represents a strategic investment by Simeka intended to launch the company into the mobility arena, and will further leverage and enhance Simeka's technology and outsourced offerings.

THE INVESTMENT PRICE AND RELATED TERMS OF THE TRANSACTION
The Simeka investment in order to acquire the sale equity is initially R5 million which may increase to a maximum amount of no more than R45 million, made up as follows:
  • R5 million invested by Simeka by no later than the end of the month in which the condition precedent to implementation of the transaction is fulfilled;
  • a further amount payable within 30 days of the approval of the audited financials of Adcheck for the financial year ended 31 March 2009, calculated as follows:
  • 7 times the audited attributable profits after tax of Adcheck ("PAT") for that period if the PAT is equal to or less than R6 million; or
  • 7.5 times the audited attributable PAT for that period if the PAT is greater than R6 million;
  • a further cash amount payable within 30 days of the approval of the audited financials of Adcheck for the financial year ended 31 March 2010 equal to 6.5 times the audited attributable PAT for that period;
  • a further cash amount payable within 30 days of the approval of the audited financials of Adcheck for the financial year ended 31 March 2011 equal to 6 times the audited attributable PAT for that period, provided that Simeka may elect to settle up to 30% of any of the aforegoing payments through the delivery of shares ("consideration shares") issued at a 10% discount to the 30 day VWAP immediately prior to the date of issue of such shares.
In the event that the Adcheck PAT for either of the financial years ending 31 March 2010 or 31 March 2011 shows a positive growth of less than 20% in that financial year when compared with the 31 March 2009 PAT, the amount payable for the sale equity shall be reduced commensurately using the multiple of 6 or 6.5 (as applicable for that year) for every Rand of such shortfall.

Alternatively, at the election of Simeka, the vendors shall be required to reduce their shareholding in Adcheck pro rata, provided that in the event that Simeka requests that the vendors reduce their shareholding as indicated, the vendors shall be entitled to cancel the transaction and refund to Simeka all payments received in settlement of the purchase price against redelivery of the sale equity to the vendors. These arrangements will only be given effect to after the determination of the PAT for the financial year ended 31 March 2011 to allow for out performance for the financial year ended 31 March 2010 to be carried forward to the financial year ended 31 March 2011.

RESTRICTIONS ON CONSIDERATION SHARES
In the event that consideration shares are issued to the vendors, typical restrictions will apply in regard to the vendors ability to dispose of consideration shares and the vendors shall be obliged to first offer any such shares to the company should they wish to dispose of any consideration shares.

KEY EXECUTIVES
Adcheck's key executives are obliged to enter into new service agreements with minimum terms of 3 years and which contain restraint of trade undertakings and that are otherwise in line with Simeka's standard executive service agreements.

CONDITION PRECEDENT TO THE TRANSACTION
Implementation of the transaction is subject to approval of the transaction by the Competition Commission.

FINANCIAL EFFECTS
Assuming a purchase price of R5 million for the sale equity, the transaction has no material effect on Simeka's historical net asset value, net tangible asset value, earnings or headline per share.

3 June 2008
Designated advisor
Java Capital (Proprietary) Limited
Date: 03/06/2008 10:26:01 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct, indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on, information disseminated through SENS.
 
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