AFGRI LIMITED - The Restructuring of AFGRIs International Businesses and a Small Related Party Transaction

The Restructuring of AFGRI’s International Businesses and a Small Related Party Transaction

AFGRI Limited
Registration Number: 1995/004030/06
(Incorporated in the Republic of South Africa)
ISIN: ZAE000040549
JSE share code: AFR

("AFGRI" or "the Company")

THE RESTRUCTURING OF AFGRI’s INTERNATIONAL BUSINESSES AND A SMALL
RELATED PARTY TRANSACTION

INTRODUCTION

AFGRI Operations Limited, a wholly owned subsidiary of the Company ("AFGRI
Operations”) and various international subsidiaries of AFGRI Operations (“AFGRI
International”) have entered into a series of intra–group transactions in terms of which inter
alia AFGRI Operations has restructured its African businesses in to a Mauritius holding
company and the remainder of its international businesses into a wholly owned subsidiary of
AFGRI ("the Transaction").

1. THE TRANSACTION

1.1     Rationale

1.1.1     A strategic decision has been made by AFGRI to effectively manage its African
          business from Mauritius.

1.1.2     Mauritius is recognized as a strategic global business centre and has proven itself
          as one of the most financially sound economies in SADEC.

1.1.3     AFGRI is expecting that the Transaction will attract international investors who wish
          to invest in food and agricultural businesses in the African continent.

1.1.4     The Transaction will furthermore ensure a cash benefit for the Agri Sizwe
          Empowerment Trust (Master’s reference no. IT 9911/04) (“AST”), AFGRI
          Operations’ BEE Partner.

1.2     Terms of the Transaction

           In terms of the Transaction:
1.2.1      AFGRI Grain Marketing Proprietary Limited sells its shares and claims in AFGRI
           Mauritius Investment Limited (“AFGRI Mauritius”) to AFGRI Operations.

1.2.2      AFGRI Operations sells its shares and claims in:

1.2.2.1      AFGRI Corporation Limited (Zambia);

1.2.2.2      Bnot Harel Nigeria Limited;

1.2.2.3      AFGRI Zimbabwe Equipment Private Limited (“AFGRI Zimbabwe”);

1.2.2.4      Collateral Management International Limited; and

1.2.2.5      AFGRI Ghana Company Limited;

             to AFGRI Mauritius in exchange for additional shares in AFGRI;

1.2.3.       AFGRI Operations sells its shares and claims in:

1.2.3.1.     AFGRI Australia Pty Ltd;

1.2.3.2.     Afrgitech Limited; and

1.2.3.3.     AFGRI Mauritius;

             to Betakilo Garage Proprietary Limited, a wholly owned subsidiary of AFGRI
             Limited. (“AFGRI Subco”)

1.2.4.     As part of the transaction contemplated in terms of paragraphs 1.2.2 and 1.2.3
           above, AST sells its 26.77 % undivided interest in AFGRI International to AFGRI
           Subco for a purchase consideration of R 55.7 million payable in cash; and

1.2.5.     AFGRI Operations declares a dividend to AFGRI Limited equal to the amount it
           received from AFGRI Subco in terms of the transactions in paragraph 1.2.3 above.

1.3.    Unaudited Pro Forma Financial Effects

1.3.3.     Unaudited pro forma financial effect

           The table below sets out the unaudited pro forma financial effects on AFGRI’s
           earnings per share (“EPS”) headline EPS (“HEPS”), net asset value per share
           (“NAV”) and tangible NAV (“TNAV”).
            The unaudited pro forma financial effects have been prepared using accounting
            policies that comply with International Financial Reporting Standards and that are
            consistent with those applied in the interim group results of AFGRI for the six
            months ended 31 December 2012.

            The unaudited pro forma financial effects, which are the responsibility of the Board,
            are provided for illustrative purposes only and, because of their pro forma nature,
            may not fairly present AFGRI’s financial position, changes in equity, results of
            operations or cash flow.




                                                                          After
                                                     Before1                              Change3,4
 For the six months ended 31 December 2012                            Transaction2

                                                     (cents)             (cents)            (%)

EPS5                                                   33.5                        32.1       -4.2%
        5
HEPS                                                   31.3                        29.9       -4.5%
    6
NAV                                                   515.1                       502.6       -2.4%
        6
TNAV                                                  419.1                       406.6       -3.0%
Weighted average number of AFGRI shares in
                                                      335.8                       335.8       0.0%
issue (millions)
Number of AFGRI shares in issue (millions)            357.4                       357.4       0.0%
Notes and assumptions:

1.    The AFGRI financial information reflected in the “Before” column has been extracted
      from the interim group results of AFGRI for the six months ended 31 December 2012.

2.    The AFGRI financial information reflected in the “After Transaction” column has been
      calculated on the basis that the Transaction would be implemented based on the
      interim group results of AFGRI for the six months ended 31 December 2012.

3.    The change reflects the difference between the position before and after the
      Transaction on a percentage basis.

4.    The negative impact on EPS and HEPS is a once off impact as a result of costs
      incurred in implementing the Transaction.

5.    The pro forma adjustments to the published interim group statement of comprehensive
      income have been calculated on the assumption that the Transaction was
      implemented on 1 July 2012.

6.    The pro forma adjustments to the published interim group statement of financial
      position have been calculated on the assumption that the Transaction was
      implemented on 31 December 2012.

1.4. Suspensive conditions

     The suspensive conditions to the Transaction have been fulfilled on 30 May 2013.

2.   Small related party transaction

     AST had a 26.77% undivided partnership interest in the business of AFGRI Operations
     and was therefore treated as a related party to AFGRI. KPMG Services Proprietary
     Limited, as the independent professional expert, has confirmed that the consideration
     received by AST for the disposal of their undivided partnership interest in AFGRI
     International to AFGRI Subco is fair and their fairness opinion is available for inspection
     at AFGRI’s registered office until 30 June 2013.

     Centurion
     04 June 2013

Investment Bank and Sponsor to AFGRI:   Investec Bank Ltd

Independent auditors:  PWC

Tax advisor:  KPMG       

Legal advisor to AST:  Van der Merwe Attorneys

BEE Consortium:  Izitsalo

Date: 04/06/2013 05:29:00 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.