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Yorkcor - Acquisition and withdrawal of cautionary announcement The York Timber Organisation Limited (Incorporated in the Republic of South Africa) (Registration number: 1916/004890/06) Share code: YRK & ISIN code: ZAE000008108 ("Yorkcor" or "the company") Acquisition of the business of Taurus Estates (Pty) Limited and withdrawal of cautionary announcement 1. Introduction and terms The board of Yorkcor is pleased to announce that Yorkcor, through its subsidiary, Madiba Forest Products (Pty) Limited ("Madiba"), has reached agreement with Taurus Estates (Pty) Limited ("the vendor") for the acquisition of the vendor"s entire business as a going concern ("the business") for a consideration of R17 million ("the consideration") (collectively, "the acquisition"). The effective date of the acquisition is the date at which the property forming part of the business is transferred into the name of Madiba, which is expected to be in early-2006. The consideration will be settled by means of: - an amount of R625 000 payable by way of the delivery of 50 000 Yorkcor ordinary shares at R12,50 each on the effective date ("the share settlement"); - an amount of R8 187 500 payable in cash on the effective date ("the initial cash payment"); and - an amount of R8 187 500 payable in cash in four equal annual instalments of R2 046 875, plus interest calculated in arrears on the outstanding balance at 200 basis points below Standard Bank"s prime rate, commencing on the first anniversary of the effective date ("the vendor loan"). 2. Description of the business and rationale for the acquisition The business is situated near Barberton in Mpumalanga and comprises soft and hardwood plantations on five adjacent properties, a third of which are mature and ready for harvesting, as well as silvicultural operations, beneficiation of sawlogs, and timber trading and processing, including plant and equipment. The business is being acquired free of liabilities and claims. The board previously communicated to shareholders Yorkcor"s four-pronged growth strategy, namely the securing of log supply lines, pursuing selected acquisitions, realising selected trading opportunities and promoting its involvement with Black Economic Empowerment ("BEE"). The acquisition is therefore viewed as strategically important by the board in as much as it: - allows Yorkcor control over additional sources of sawlog supply; - will facilitate the continued expansion of the timber processing of the Madiba group within the aegis of Yorkcor; and - has been identified as an appropriate opportunity to expand the company"s BEE credentials at an operational level by inviting broad based BEE entities to participate directly in the prospects of the business. 3. Financial effects The table below sets out, for illustrative purposes only, the pro forma financial effects of the acquisition on the unaudited financial statements of Yorkcor for the six months ended 30 June 2005. The pro forma earnings figures illustrate the possible financial effects if the transaction had been undertaken on 1 January 2005 that is for a period of six months, whereas the pro forma net asset value figures illustrate the possible financial effects if the transaction was effected on 30 June 2005. Due to their nature, the pro forma financial effects may not give a fair reflection of Yorkcor after the acquisition. Before the After the % change acquisition - acquisition - Six months Pro forma Ended six months
30 June 2005 Earnings (cents per share) 73.0 76.1 (1) +4.2% Headline earnings (cents per share) 72.7 75.8 (1) +4.3% Net asset value and net tangible 777.3 779.4 (2) +0.3% asset value (cents per share) Average and weighted average 11 040 497 11 090 497 +0.5% number of shares in issue (3) Notes and assumptions: 1. Pro forma earnings and headline earnings incorporate the unaudited income statement of the vendor for the 12 months ended 28 February 2005, expressed for a six month period and after taking into account the following adjustments: - management"s assessment of the operating costs of the business within the Yorkcor group; - an interest rate on call deposits of 6.2% and a bond interest rate of 8.5%; and - a company tax rate of 29%. 2. Pro forma net asset value and net tangible asset value incorporate the consideration, to be funded by a combination of equity, debt (for the first R5 million of the initial cash payment), internal cash resources (for the remainder of the initial cash payment) and the vendor loan. 3. Assuming that the share settlement takes place by way of an issue of new Yorkcor shares. Should the Purchaser elect to settle this portion of the consideration by way of existing Yorkcor shares the effect on the number of Yokcor shares in issue will be zero. 4. Conditions precedent The acquisition is subject to conditions that are considered normal for a transaction of this nature, of which the following remain outstanding: - copies of the title deeds under which the immovable property is held being made available to Madiba before 31 October 2005; - an undertaking and resolution by the trustees of the Andrew Landman Trust, the sole shareholder of the vendor ("the Trust"), to vote in favour of the acquisition; - an undertaking and resolution by the vendor and the Trust that the mortgage bond in favour of NCT Forestry Co-operative Limited have been repaid and/or cancelled; - the vendor indemnifying Madiba against any claims by employees arising before the effective date; and - the requisite regulatory compliance and approval. 5. Withdrawal of cautionary Shareholders are referred to the cautionary announcements published on SENS on 1 June, 25 July, 6 September and 15 September 2005 advising that the company had entered into various discussions. The discussions relating to a BEE transaction have been terminated. 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 securities. 13 October 2005 Pretoria Sponsor: Sasfin Corporate Finance, A division of Sasfin Bank Ltd Date: 13/10/2005 01:58:34 PM Supplied by www.sharenet.co.za Produced by the JSE SENS Department
