Acquisition of the businesses of Grayston Technology Investments (Pty) Ltd

The board of SilverBridge is pleased to announce that the Group has reached agreement, through its wholly owned subsidiary Tiespro 181 (Pty) Ltd, to purchase the Acczone Academy business and the Acczone Software business from Grayston Technology Investments (Proprietary) Limited ("the vendor") ("the acquisition"). Tiespro 181 (Pty) Ltd will change its name to Acczone Systems (Pty) Ltd ("Acczone").

The effective date of the acquisition is 1 December 2009.

2. Rationale for the acquisition

SilverBridge offers integrated, flexible and cost-effective business administration solutions to the providers of financial services. The Group currently operates through two subsidiaries, namely SDT, which specialises in life and employment benefit administration software and Ones & Zeros ("ONZ") which offers consulting services to financial service institutions. The Group's stated strategy is to expand into other pillars of financial services and, over the medium term, specifically into, inter alia, loans administration software. Acczone is and will continue to be a Sage development partner. Sage is an international provider of business management software and services.

Acczone is a leading provider of loan administration software for midmarket and enterprise organisations in Africa. Acczone has developed its own loan administration software which also integrates with Sage Accpac ERP suite of products as well as SageCRM. As such, it complements and expands the current SilverBridge offerings.

SilverBridge, through its subsidiary, is acquiring the business of the vendor inclusive of the intellectual property, partnerships and client contracts. Management and staff of the vendor will be retained within the Group to ensure continuity of projects, customer relationships and product integrity.

3. Calculation of the purchase consideration

Silverbridge shall make available to Acczone a R3 million short term loan facility to fund the continued development of the acquired software ("the loan").

The purchase consideration will be settled partly in cash ("the cash consideration") and partly by the issue of new Silverbridge shares ("the equity consideration").The purchase consideration will be determined by applying a specified multiple to the net profit after tax of Acczone as recorded in its annual financial statements for the twelve months ended 28 February 2011 ("2011 AFS") and subtracting the loan from the result. The purchase consideration is capped at a maximum of R18 million.

The specified multiple for the cash consideration will be 2.8. The specified multiple for the equity consideration will be 35% of the corresponding Silverbridge price:earnings multiple, with a minimum of 2. The intention behind the purchase consideration is to arrive at a PE that is approximately 70% of the SilverBridge PE as at 28 February 2011.

4. Settlement of the purchase consideration

The cash consideration will be settled as follows:

- R3 million payable on the effective date; and
- The balance, if any, upon the completion and approval of the 2011 AFS.

The equity consideration will be settled as follows:

- The issue of Silverbridge shares, at an issue price of R1,65 per Silverbridge share, upon the completion and approval of the audited financial statements for the three months ended 28 February 2010 ("the 2010 AFS). The number of shares to be issued shall be calculated by applying a multiple of 4 to the audited net profit after tax as recorded in the 2010 AFS. 
- The balance, if any, upon the completion and approval of the 2011 AFS by the issue of new Silverbridge shares at the 30-day volume weighted average price to 28 February 2011.

5. Financial effects

The unaudited pro forma financial effects of the acquisition, based on the published unaudited results of SilverBridge for the interim period ended 31 August 2009 are set out below. The unaudited pro forma financial effects have been prepared for illustrative purposes only to provide information on how the acquisition may have impacted on the results and financial position of SilverBridge. Preparation of the unaudited pro forma financial effects is the responsibility of the directors. Because of their nature, the pro forma financial effects may not fairly present SilverBridge's financial position after the acquisition or the effect on future earnings:

Before the acquisition
(1) After the acquisition - pro forma(2&3) % Change
Earnings (cents per share) 15.25 15.37 0.8%
Headline earnings (cents per share) 15.02 15.14 0.8%
Net asset value (cents per share) 136 136 0.0%
Net tangible asset value (cents per share) 77 68 -11.4%
Weighted average number of shares in issue (In thousands) 33 773 33 773 0.0%
Number of shares in issue (In thousands) 34 232 34 232 0.0%

Notes and assumptions:
(1) The figures in the "Before" column are extracted from the Group's published unaudited interim results for the six month period ended 31 August 2009.
(2) Earnings and headline earnings figures in the "After" column are based on the assumption that the acquisition took place on 1 March 2009, after taking into account the following adjustments:
- a loss of interest for six months at a rate of 8% per annum earned on cash;
- a company tax rate of 28%.
(3) The net asset value and net tangible asset value figures in the "After" column are based on the following assumptions:
- the acquisition took place on 31 August 2009;
- the cash payment of R3 million due on the effective date was made and allocated to intangibles assets;
- the balance of the purchase price was not taken into account due to the contingent nature thereof.

6. Conditions precedent

There are no outstanding conditions precedent to the acquisition.

7. Categorisation of the acquisition

The acquisition is categorised as a Category 2 transaction in terms of the JSE Limited Listings Requirements for companies on the Alternative Exchange board.

8. Withdrawal of cautionary announcement

Shareholders are referred to the cautionary announcement published on SENS on 26 October 2009. By virtue of the conclusion of the acquisition on the terms referred to in this announcement, caution is no longer required to be exercised by shareholders when dealing in their Silverbridge shares.

Johannesburg
7 December 2009

Designated Advisor: Sasfin Capital
(A division of Sasfin Bank Limited)

Corporate finance advisors to Graytech : Cynergy Corporate Finance

Legal Advisors to SilverBridge: Gildenhuys Lessing Malatji