Tue 21 Jan 2020, 7:06 WORKFORCE HOLDINGS LIMITED - WKF : Acquisition of Chartall Business College
WKF : 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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