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Sale of business and assets, no change statement, notice of AGM, trading update and cautionary announcement
Buildmax Limited
Incorporated in the Republic of South Africa
(Registration No. 1995/012209/06)
Share Code: BDM
ISIN Code: ZAE000167318
("Buildmax" or the “Company” or the “Group”)
SALE OF BUSINESS AND ASSETS BY BUILDMAX AGGREGATES AND QUARRIES, NO
CHANGE STATEMENT, NOTICE OF ANNUAL GENERAL MEETING, TRADING UPDATE
AND UPDATED CAUTIONARY ANNOUNCEMENT
1. SALE OF BUSINESS AND ASSETS BY BUILDMAX AGGREGATES AND QUARRIES
1.1. Introduction
Further to the cautionary announcement released by the Company on SENS on
1 August 2014, the Buildmax board of directors (“the Board”) is pleased to announce
that Buildmax, through its wholly-owned subsidiary, Buildmax Aggregates and Quarries
(Pty) Ltd (“BAQ”), and certain of the subsidiaries of BAQ, has entered into a sale of
business and assets agreement ("Sale Agreement") with Raubex Group Ltd (share code
RBX) ("Raubex") and its wholly-owned subsidiary, Raumix Aggregates (Pty) Ltd
("Raumix"), in terms of which Raumix will acquire certain assets of BAQ (“the
Transaction”). BAQ has also entered into contract mining agreements with Raumix on
behalf of Crushco (Pty) Limited, Alfa Sandworks (Pty) Limited, Mystic Blue Trading 135
(Pty) Limited and Verlesha Investments (Pty) Limited, all subsidiaries of BAQ.
1.2. Rationale for the Transaction
The Board has determined that the aggregate and quarry operations of BAQ are
non-core to Buildmax’s main contracting business, and that the offer received from
Raumix represents realistic fair market value taking into account the current operating
environment. The proceeds of the Transaction will be used to improve the overall
liquidity of the Group as well as to fund working capital requirements in light of the
current tight funding environment. In addition, as referred to in the cautionary
announcement of 1 August 2014, the sale of business and assets by BAQ is considered
to be strategically aligned with the non-binding expression of interest to dispose of the
entire equity of Buildmax.
1.3. Terms of the Transaction
The consideration payable by Raumix is an aggregate purchase price of R54 761 000,
plus the value of the stock (including stockpiles, spare parts and fuel) held by BAQ as at
the effective date, and is payable in cash on the implementation date.
1.4. Conditions precedent
The effective date of the Sale Agreement is 1 September 2014, and the Sale Agreement
will be implemented on the first business day following the fulfilment of the conditions
precedent, which include:
1. execution of the contract mining agreements referred to above;
2. approval by the Raumix board of directors;
3. approval of the BAQ board of directors and the relevant subsidiaries;
4. the passing of resolutions by Buildmax, as the shareholder of BAQ, and by BAQ, as
the shareholder of the relevant subsidiaries, approving the Transaction in terms of
sections 112 and 115 of the Companies Act, 2008, to the extent required; and
5. all the necessary regulatory notifications and approvals.
1.5. Pro forma financial effects
The table below sets out the unaudited pro forma financial effects of the Transaction for
the 12 months ended 28 February 2014 based on the assumption that the Transaction
was implemented on 28 February 2014 for the purposes of calculating the net asset
value and tangible net asset value per share, and on 1 March 2013 for the purpose of
calculating the basic earnings and headline earnings per share.
The unaudited pro forma financial effects are presented for illustrative purposes only
and, because of their nature, may not fairly present Buildmax’s financial position or the
results of its operations after the Transaction has been implemented. The unaudited pro
forma financial effects are the responsibility of the Board.
Before the After the Percentage Notes
Transaction Transaction change Reference
%
Basic earnings per share (cents) 33.40 7.20 (78.44%) 2.a to 2.e
Headline earnings per share (cents) 2.c and
32.90 33.62 2.19% 2.e
Net asset value (“NAV”) per share 2.a, 2.b
(cents) 361.20 334.31 (7.44%) and 2.d
Tangible net asset value (“TNAV”) per 2.d
share (cents) 323.00 322.37 (0.20%)
Number of shares and weighted
average number of shares in issue
(000’s) excluding Treasury shares 180 910 180 910 0.00%
Notes:
1. The financial information as set out in the “Before the Transaction” column has been
extracted without adjustment from the published annual financial results of Buildmax for
the year ended 28 February 2014.
2. The financial information as set out in the ”After the Transaction” column has been based
on the financial information as set out in the previous column after adjusting for the
following:
a. impairment of the goodwill attributable to BAQ of R27.1 million;
b. impairment of the intangible asset by R28.4 million to R30.0 million (being the
value of the intangible asset as indicated in the Option and Right of First Refusal
Agreement), before taking into account deferred taxation of R7.9 million;
c. elimination of the divisional financial results of BAQ and its subsidiaries for the
year ended 28 February 2014, extracted from the segmental financial results of
Buildmax for the year then ended;
d. de-recognition of the net assets subject to the Transaction of R56.3 million and
recognition of the cash consideration of R54.7 million, resulting in a loss on sale
of R1.6 million, before taking into account deferred taxation of R0.4 million; and
e. recognition of the net income from the Contract Crushing and Off-take
Agreement, amounting to R3.7 million, before taking into account taxation of R1.0
million.
3. The adjustments are expected to have a continuing effect on the Company.
1.6. Application of the proceeds
The purchase consideration received from Raumix in terms of the Transaction will be
retained as treasury capital in order to improve the liquidity of the Group.
1.7. Option and Right of First Refusal
In addition, an agreement ("Option and Right of First Refusal Agreement") has been
entered into in terms of which Raubex is granted a right of first refusal to purchase, and
BAQ is granted a put option to sell, effective 1 June 2015 to 31 December 2016, the
mining rights held by BAQ’s subsidiaries as well as the related properties.
If exercised, the price payable would be an aggregate amount of R37 000 000, payable
in cash on the implementation date of the relevant transaction.
1.8. Categorisation of the Transaction
The Transaction is a category 2 transaction in terms of section 9 of the JSE Listings
Requirements and, as such, approval by Buildmax shareholders in a general meeting is
not required.
2. NO CHANGE STATEMENT AND NOTICE OF ANNUAL GENERAL MEETING
2.1. No change statement
Shareholders are hereby advised that the audited annual financial statements and
integrated annual report will be published on the Company's website
(www.buildmax.co.za) with effect from today, 28 August 2014.
In addition, the abridged annual financial statements contained in the Notice of Annual
General Meeting have, today, been distributed to the Company's shareholders who were
recorded as such in the Company's security register on Friday, 22 August 2014.
2.2. Notice of Annual General Meeting
Notice is hereby given that the Annual General Meeting of shareholders will be held at
11:00 on Thursday, 30 October 2014 at The Country Club Johannesburg, 1 Napier
Road, Auckland Park, Johannesburg, to transact the business as set out in the Notice of
Annual General Meeting forming part of the abridged annual financial statements.
The Board has determined that the last day to trade to be eligible to participate in and
vote at the Annual General Meeting is Friday, 17 October 2014 and the record date for
purposes of determining which shareholders are entitled to participate in and vote at the
Annual General Meeting is Friday, 24 October 2014. Only shareholders who are
registered by Friday, 24 October 2014 will be entitled to participate in and vote at the
Annual General Meeting.
3. TRADING UPDATE
In terms of section 3.4(b) of the JSE Listings Requirements, companies are required to
publish a trading statement as soon as they become reasonably certain that the financial
results for the period to be reported on will be more than 20% different from that of the
previous corresponding period.
The Group’s successfully established operations in Botswana continues to perform above
expectation, despite this, the Board anticipates that, as a result of, inter alia, anticipated
impairments to the intangible assets and goodwill of BAQ, in addition to the continuing poor
trading conditions, the Company will report a loss and headline loss per share for the interim
period ending 30 August 2014. In response to the continuing poor demand for coal, driven
largely by current low commodity prices, management have implemented several
restructuring and cost savings initiatives which have negatively impacted the profitability of
the Company in the first 6 months, but will derive significant savings in the future.
Accordingly, in compliance with section 3.4(b)(iii) of the JSE Listings Requirements,
shareholders are advised that the Company anticipates, with a reasonable degree of
certainty, a loss per share between 48.5 cents per share and 58.0 cents per share and a
headline loss per share between 24.2 cents per share and 29.0 cents per share.
The Buildmax share price closed at R2.40 on 27 August 2014 which represents a discount of
28.2% to the pro forma NAV and 25.6% to the pro forma TNAV.
The financial information on which this trading statement is based has not been reviewed and
reported on by the Company’s external auditors.
A further trading statement will be published once the Company has more certainty with
regards to its financial results for the interim period.
The Company's financial results for the interim period ended 30 August 2014 are expected to
be released before the end of November 2014.
4. UPDATED CAUTIONARY ANNOUNCEMENT
For the avoidance of doubt, shareholders are advised that the Board continues to consider
the non-binding expression of interest received from a third party to acquire the entire issued
share capital of Buildmax as disclosed in the SENS announcement on 1 August 2014.
Accordingly, shareholders are advised to continue exercising caution when dealing in the
Company's securities until a further announcement is made.
Benoni
28 August 2014
Sponsor to Buildmax Legal advisers to Buildmax
Questco (Pty) Ltd Webber Wentzel
Date: 28/08/2014 09:25:00 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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