Jumbo Corporation LtdABN: 66 009 189 128 (ASX: JUM)Level 19,...

Jumbo Corporation Ltd
ABN: 66 009 189 128 (ASX: JUM)
Level 19, Riverside Centre
123 Eagle Street
Brisbane QLD, 4000
Ph: +61 7 3831 3705
Fax: +61 7 3831 9720
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ASX RELEASE – Monday 25 June 2007
JUMBO TO ACQUIRE MANACCOM
Leading Australian e-commerce company, ASX-listed Jumbo Corporation Limited
(ASX code: JUM), announced today it had entered into a conditional Heads of
Agreement to acquire Manaccom, a specialist software publishing and distribution
business with contracts to supply major retail chains including Harvey Norman, D#ck
Smith, JB Hi-Fi and Officeworks.
Manaccom was named in the BRW Fast 100 list and distributes a range of leading
computer software including Trend Micro PC-cillin Internet Security, as well as Net
Nanny, the popular child online protection software (www.manac.com.au).
The highlights of Manaccom’s audited accounts for the 12 month period ended 30
June 2006 are:
• $11 million in Revenue
• $1.6 million in EBITDA
The results for the 2007 financial year are forecast to exceed these results.
The purchase consideration of $5.1 million was structured as follows:
• $2.5 million cash on settlement (bank finance).
• 80 million JUM shares (at 3.25c).
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“This acquistion represents a positive move
by the Company to further develop its
ecommerce and IT division”, said Mr Mike
Veverka.
“The combined talents of Jumbo and
Manaccom provide some strong synergies,
and some exciting opportunities to grow the
business.
“Manaccom enjoys strong distribution
agreements with some of Australia’s
leading retail outlets including D#ck Smith
Electronics, JB Hi-Fi, Officeworks and
Harvey Norman and has representation in
all Australian states and New Zealand.
Manaccom has been the recipient of the
last two prestigious “Software Supplier of
the Year” awards from Harvey Norman.
“Jumbo and Manaccom have already worked together on web-based software off-shore distribution
projects for software vendors and this acquisition would increase the focus on these projects.
It is envisaged a “best of both worlds” solution can be offered with Australian customers satisfied
through the national retail channel and software sold online internationally.
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Manaccom Founder and Managing Director, Mr Ian Mackay said: “The combined Manaccom and Jumbo
business will be well positioned to take advantage of growth opportunities in the IT sector”.
“We believe the combination of Jumbo’s e-commerce expertise and Manaccom’s software expertise will
create a formidable force.
Mr Mackay said “Manaccom was established in 1986, has been profitable since inception and has had
significant profit growth in the past three years.
Jumbo has also been profitable for the past 4 years and directors expect that the acquisition will
substantially expand its operational activities.
About Jumbo
Jumbo has long history in the information technology industry dating back to 1995 with the development
of some of the first software applications in the world to handle secure online sales.
In 2005, Jumbo acquired TMS Global Services Pty Ltd, a lottery network operator with licenses to sell
Australian lotteries from Tattersalls’ and NSW Lotteries Corporation. Jumbo used its e-commerce
experience to transform the Ozlotteries.com division into the fastest growing division within TMS. It is
now in the process of reinvigorating the Pacific Island division which sells lotteries through a computer
network around the Pacific in countries such as Fiji, Norfolk Island and the Cook Islands.
Jumbo has made several announcements regarding its efforts to expand its scope for future growth by
reviewing acquisition opportunities in the e-commerce and information technology industries. The
acquisition of Manaccom is a direct result of this effort.
“Jumbo will continue its commitment to growing the lottery division at the same time as integrating
Manaccom into the group”, said Mr Veverka.
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“I believe the efforts made over the past 2 years to improve the lottery division provide Jumbo with a
good base from which to grow the division in the future”, he said.
About Manaccom
Manaccom is based in Brisbane with representatives covering all of Australia and New Zealand. It
employs approximately 50 staff and is one of the very few software distributors in Australia that is able to
service almost the whole country with its own representatives (using agents only in SA and WA).
Manaccom’s call centre in Brisbane provides technical support to end users of products distributed by
the company by telephone and email. Software products are manufactured locally under licence rather
than imported enabling products to be packaged and marketed according to local requirements. The
range of software includes internet security, payroll processing, PDF creation, disk backup and a wide
range of lifestyle products.
Mr Ian Mackay is the sole shareholder of Manaccom and following the acquisition will become a
significant shareholder and will be invited to join the board of Jumbo as a non-executive director.
Mr Mackay has a background in accounting and auditing before establishing Manaccom in 1986 to
provide software for the booming PC market. During that time he has established strong relationships
with large international software vendors such as Trend Micro as well as large retail outlets such as
Harvey Norman, The Coles Group and JB Hi-Fi.
Mr Mackay was a past National President of AIMIA (Australian Interactive Multimedia Industry
Association), a board member of QANTM (Government funded Co-operative Multimedia Centre) and
chaired the Queensland Government IIB (Information Industries Board) panel to review the computer
games industry in Queensland.
Financial performance
Manaccom has provided to Jumbo the following unaudited profit guidance for the year ending 30 June
2007 (based on unaudited management accounts):
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12 months to 30 June 2006
(Audited)
12 months to 30 June 2007
(Unaudited Forecast)
Operating Revenue $11.5 million $12.2 million
EBITDA $1,600,000 $1,700,000
EBIT $1,500,000 $1,600,000
The actual trading results from Manaccom will only be consolidated with Jumbo’s results from the date
of the acquisition.
Jumbo recently released a profit guidance on 8 June and anticipates to release more detailed results in
the coming weeks.
Based on the above results the directors anticipate that the acquisition will substantially strengthen the
Company’s consolidated revenue to over $30 million.
As an indication of the combined size of Jumbo and Manaccom, the following pro forma balance sheet is
provided.
Jumbo
Audited at
31 December 2006
Manaccom
Unaudited at
31 May 2007
Goodwill arising
from the
acquisition
Pro forma
balance sheet
Total Assets $11.5 million $2.7 million $4.6 million $18.8 million
Total Liabilities $3.6 million $2.2 million - $5.8 million
Net Assets $7.9 million $0.5 million $4.6 million $13.0 million
The goodwill arising from the acquisition of $4.6 million is based on a purchase price of $5.1 million and
Manaccom net assets of $0.5 million.
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Purchase consideration and effect on share capital
The purchase consideration of $5.1 million (subject to certain conditions including shareholder approval)
has been structured as follows:
• $2.5 million cash on settlement (bank finance)
• 80 million JUM shares (at 3.25c).
The effect of the proposed acquisition on the share capital of Jumbo is shown below:
Current Post Acquisition
Number of shares on issue 370 million 450 million
Number of options on issue 16.25 million 16.25 million
Number of shares and
options (fully diluted)
386.25 million 466.25 million
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Conditions precedent
The acquisition of Manaccom under the Heads of Agreement is subject to a number of conditions
precedent including:
• Jumbo obtaining shareholder approval for the purpose of the ASX listing rules.
• Jumbo obtaining acceptable debt finance (preliminary finance approval has been obtained).
• Jumbo completing due diligence on Manaccom to its satisfaction.
• Jumbo finalising employment agreements with key Manaccom executives.
• The parties entering into a formal sale agreement.
Timeframe
Directors have begun preparing a Notice of Meeting and Explanatory Memorandum with a view to
calling a meeting of shareholders in July. If approved, and if all other conditions precedent are satisfied
or waived, the Directors anticipate that the acquisition will be completed by the end of July or early
August 2007. Further details of the transaction and an indicative timetable will be provided in the Notice
of Meeting and Explanatory Memorandum.
Conclusion
The Directors of Jumbo believe the acquisition of the Manaccom business will provide Jumbo
shareholders with involvement in a growth market sector with established revenues and the benefit of
synergies with Jumbo’s skills and operational interests.
This announcement together with general information on the company and ASX releases are available
at: www.jumbocorporation.com
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(this is not an asset of the company)
For further Information:
Press Material at www.jumbocorporation.com
Mike Veverka Sean Whittington
CEO, Jumbo Corporation Field Public Relations
(07) 3831 3705 (08) 8234 9555 / (0412) 591 520
Notes
EBITDA: Earnings before Interest, Tax, Depreciation and Amortisation