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YRK - Yorkcor - Acquisition of the business of the Goedgeloof Plantation 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 the Goedgeloof Plantation 1. Introduction and terms The board of Yorkcor is pleased to announce that Yorkcor, through its subsidiary, York Timbers Limited ("York"), has reached agreement with Crocodile Valley Estates (Pty) Limited ("the vendor") for the acquisition of the vendor`s entire business as a going concern ("the business") for a consideration of R32,3 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 York, which is expected to be in early 2007. The consideration of R32,3 million will be settled by means of: - an amount of R750 000 already paid as a deposit in order to secure an exclusive option to purchase;
- an amount of R31,6 million payable in cash on the effective date ("the final cash payment") Yorkcor will initially fund the consideration out of its available cash resources and will raise a long term bond against the property in due course of approximately R20 million. 2. Description of the business and rationale for the acquisition The business is situated near Graskop in Mpumalanga and comprises soft and hardwood plantations on three 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. 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 York 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. Two of the three properties have land claims under investigation. Yorkcor`s Directors are dealing constructively with these claims and have taken the requisite steps to manage the process, including making allowance for claimants in an empowerment transaction at group level, bringing claimants into the subcontracting activities that will be required in the management of the business, and working in cooperation with the Land Claims Commissioner. The land claims in any event apply to the properties and not the standing timber where most of the value lies. The Directors are working towards long term leases in favour of the claimants, once the commissioner has paid compensation to York for the land values. 3. Financial effects The pro forma financial effects of the acquisition, based on the published unaudited half year results of Yorkcor for the six months ended 30 June 2006 are set out below. The pro forma earnings figures illustrate the possible financial effects if the acquisition had been implemented on 1 January 2006, that is for a period of six months, whereas the pro forma net asset value figures illustrate the possible financial effects if the acquisition was implemented on 30 June 2006. The 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 Yorkcor. Preparation of the pro forma financial effects is the responsibility of the directors. Because of their nature, the pro forma financial effects may not fairly present Yorkcor`s financial position after the acquisition or the effect on future earnings: Before the After %
acquisition the change - acquisition Six months - ended Pro forma
30 June 2006 Six months Earnings (cents per 87.1 92.1 (1) +5.8% share) Headline earnings (cents 87.1 92.1 (1) +5.8% per share) Net asset value and net 743.3 743.3 (2) tangible asset value 0% (cents per share) Average and weighted 11 040 597 11 040 597 0% average number of shares in issue
Notes and assumptions: (1) Pro forma earnings and headline earnings are based on Yorkcor`s published unaudited interim results for the six months ended 30 June 2006 and incorporate the estimated income statement of the
vendor for the six months ended 30 June 2006, 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% and a bond interest rate of 10%; and - a company tax rate of 29%. - a bond is raised of R20 million rand against the acquisition
and the interest is taken into account for 6 months. (2) The net asset value and net tangible asset figures are based on the assumption that the acquisition happened on 30 June 2006 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: - the vendor indemnifying York against any claims by employees arising before the effective date; and - the requisite regulatory compliance and approval. 5. Categorisation of the transaction The acquisition is categorised as a Category 2 transaction in terms of the JSE Limited Listings Requirements. A circular giving full details of the acquisition is being prepared and will be posted to shareholders in due course. Pretoria 19 December 2006 Sponsor: Sasfin Capital A division of Sasfin Bank Limited Date: 19/12/2006 14:03:01 Supplied by www.sharenet.co.za Produced by the JSE SENS Department.
