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Acquisition of Chartall Business College
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 CHARTALL BUSINESS COLLEGE
1. INTRODUCTION
The board of directors of Workforce (“the Board”) is pleased to inform shareholders that on 20 January
2020 (“Signature Date”), Workforce entered into a purchase and sale agreement (“Agreement”) with
Kevin Walpole Boyers (“the Seller” or “Kevin Boyers”), Uni Education Group (Proprietary) Limited
(“UEG”) and Karen Annette Deller (“Karen Deller”).
As at 1 January 2020 (“Effective Date”), the Seller is the beneficial owner of the entire issued share
capital of UEG, which in turn is the sole shareholder and holding company of Chartall Business College
(Proprietary) Limited (“Chartall Business College”).
In terms of the Agreement, and subject to the fulfilment or waiver of the conditions precedent set out in
paragraph 2.3 below (“Conditions Precedent”), the Seller will sell 100% of his shares and claims in
UEG, (collectively referred to hereinafter as the “Sale Interest”) to Workforce with effect from the
Effective Date, for the purchase consideration set out in paragraph 2.4 below (“Purchase
Consideration”) (the “Acquisition”).
UEG and Chartall are collectively referred to hereinafter as “Group Companies”.
2. THE ACQUISITION
2.1 Nature of the business of Chartall Business College
Chartall Business College was established in South Africa in 2012 by Kevin Boyers and Dr Karen
Deller and is recognised as an innovative provider of education and training, servicing mainly the
corporate market, with a focus on the financial services industry.
Chartall Business College is registered with the Department of Higher Education and Training as
both a Higher Education Institution and a private Further Education and Training college and is
also fully accredited with BANKSETA. Chartall Business College differentiates itself by using
online platforms to deliver its training interventions and having a specialist focus on RPL
(recognition of prior learning), and to this end it has developed proprietary intellectual property.
2.2 Rationale for the Acquisition
The Acquisition allows the Company to further grow and diversify by bringing a niche training
business with both a market leading brand and an experienced, entrepreneurial management
team into Workforce’s training cluster.
Chartall Business College is an industry-focused training business also offering higher education
accredited qualifications which, in terms of the new B-BBEE skills development requirements, are
becoming sought after by customers seeking to maximise their B-BBEE ratings. Through the
Acquisition, Workforce’s training cluster gains exposure to the financial services market and is
also able to offer its existing clients training qualifications that meet their requirements for bursary
spend in terms of the latest B-BBEE codes.
Additionally, Chartall Business College has skills and expertise in online training, which Workforce
plans to utilise in order to enhance e-learning in its various other existing training businesses.
2.3 Conditions Precedent and Effective Date
The Acquisition is subject to fulfilment or waiver, as the case may be, of the following Conditions
Precedent:
2.3.1 delivery by the Seller to Workforce of the annual financial statements of the Group
Companies for the year ended 31 December 2019 (“Effective Date Accounts”) within
90 days of the Effective Date;
2.3.2 the conclusion of employment agreements between the Group Companies and certain
key persons by no later than 30 days after the Signature Date; and
2.3.3 the Board and the respective boards of directors of the Group Companies each
approving the purchase of the Sale Interest within 30 days of the Signature Date.
The Effective Date of the Acquisition is 1 January 2020.
2.4 Purchase Consideration
2.4.1 In terms of the Agreement, a maximum Purchase Consideration of R34 882 890 in
cash is payable by Workforce to the Seller as set out below:
2.4.1.1 an amount of R13 953 156 (“First Payment”), payable on the 30th day
following the fulfilment or waiver, as the case may be, of the Conditions
Precedent;
2.4.1.2 a maximum amount of R6 976 578 (“Second Payment”), payable no later
than 30 days from the date on which the annual financial statements of the
Group Companies for the period ending 31 December 2020 are received by
Workforce, subject to the Group Companies achieving a warranted profit
after tax (“PAT”) of R7 499 821; and
2.4.1.3 a maximum amount of R6 976 578 (“Third Payment”), payable no later
than 30 days from the date on which the financial statements of the Group
Companies for the 12-month period ending 31 December 2021 are received
by Workforce, subject to the Group Companies achieving a warranted PAT
of R8 062 308.
2.4.1.4 In the event that the aggregate value of PAT for the two-year period ending
31 December 2021 is greater than R15 562 129, the Seller shall also be
entitled to receive a top up payment based on an agreed upon formula. This
payment will be limited to a maximum of R6 976 578.
2.4.2 The Purchase Consideration contemplated in paragraph 2.4.1 above is dependent on
the Effective Date Accounts showing PAT of R6 976 578. Should this not be the case,
the Purchase Consideration and warranted PAT targets for 31 December 2020 and
31 December 2021 will be adjusted in accordance with agreed upon formulae.
2.4.3 In the event that the warranted PAT as set out in paragraph 2.4.1.2 above is not
achieved but the warranted PAT as set out in paragraph 2.4.1.3 above is exceeded
such that the aggregate PAT achieved by the Group Companies for the two-year
period ending 31 December 2021 amounts to a maximum of R15 562 129, then any
reduction that may have been made to the Second Payment will be recouped by the
Seller in addition to the Third Payment.
2.5 Other salient terms of the Acquisition
In addition to the warranties contained in the Agreement which are usual for transactions of this
nature, the Seller has undertaken that the Group Companies shall generate sufficient cash from
1 January 2020 to 31 December 2020 so that Workforce shall not be required to provide any
working capital to the Group Companies to enable them to carry on their business during this
period.
Subsequent to the Acquisition, the memorandum of incorporation of the Group Companies will be
reviewed to ensure that they do not prevent Workforce from complying with its obligations in terms
of the Listings Requirements of JSE Limited.
3. FINANCIAL INFORMATION
The value of the net assets that are the subject of the Acquisition as at 31 December 2019 was
R6 851 818.
The unaudited profit after tax attributable to the net assets that are the subject of the Acquisition for the
year ended 31 December 2019 was R6 976 578.
The annual financial statements for the year ended 31 December 2019 were prepared in accordance
with International Financial Reporting Standards for Small and Medium-sized Entities and the
Companies Act, 2008 (Act 71 of 2008), as amended.
4. CLASSIFICATION OF THE ACQUISITION
The Acquisition is classified as a Category 2 transaction in terms of the Listings Requirements of JSE
Limited.
Johannesburg
21 January 2020
Designated Adviser
Merchantec Capital
Transaction Originator
Ararat Corporate Advisory Services
Date: 21-01-2020 07:05:00
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