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Posting of BBBEE transaction circular, including updated unaudited financial effects, and reminder of cautionary
Basil Read Holdings Limited
(Incorporated in the Republic of South Africa)
(Registration number 1984/007758/06)
Share code: BSR ISIN: ZAE000029781
("Basil Read" or the "Company")
POSTING OF CIRCULAR IN RESPECT OF THE BBBEE
TRANSACTION FOR AN EFFECTIVE HOLDING OF 25.1% OF THE
TOTAL ISSUED SHARE CAPITAL OF BASIL READ INCLUDING
THE UPDATED UNAUDITED PRO FORMA FINANCIAL EFFECTS
SUBSEQUENT TO THE RELEASE OF THE UNAUDITED RESULTS
FOR THE SIX MONTHS ENDED 30 JUNE 2012, AND REMINDER
OF CAUTIONARY ANNOUNCEMENT
1.INTRODUCTION
Further to the announcement released by Basil Read on 28 June 2012, using the terms defined in that
announcement unless otherwise stated, shareholders are advised that today, Friday, 28 September 2012,
Basil Read posted to shareholders a circular containing details in respect of:
- the BBBEE Transaction; and
- the issue of the Subscription Shares;
(collectively the "Proposals"),
and incorporating
- a notice convening a general meeting of Basil Read ordinary shareholders to approve the Proposals
("General Meeting"); and
- a form of proxy for use by Basil Read certificated shareholders and Basil Read dematerialised shareholders
with "own name" registration only, (hereinafter the "BBBEE Circular").
2.SALIENT DATES AND TIMES OF THE BBBEE TRANSACTION
2012
Record date, as determined by the Board in accordance with section 59 of the
Companies Act, for shareholders to be eligible to receive the BBBEE Circular and
notice of General Meeting Friday, 21 September
Posting of this Circular Friday, 28 September
Last day to trade in order to be eligible to vote at the General Meeting Friday, 12 October
Record date to be eligible to vote at the General Meeting Friday, 19 October
Last day to lodge forms of proxy by 8h30 on Thursday, 25 October
General Meeting to be held at 8h30 on Friday, 26 October
Results of the General Meeting published on SENS Friday, 26 October
Results of the General Meeting published in the press Monday, 29 October
Expected date of Transaction to be unconditional no later than Friday, 30 November
Expected listing of the new Ordinary Shares on the JSE on or about Friday, 30 November
Notes:
1. Shareholders will be notified of any amendments to the above dates or times on SENS and in the press.
2. Unless otherwise indicated, all times referred to in this announcement are local times in South Africa on a 24-hour basis
3.UNAUDITED PRO FORMA FINANCIAL EFFECTS
The table below sets out the unaudited pro forma financial effects of the issue of the Initial Ordinary Shares
and the issue of the "A" Ordinary Shares on the published unaudited results of Basil Read for the six months
ended 30 June 2012. The unaudited pro forma financial effects have been prepared for illustrative purposes
only and because of their nature may not fairly present Basil Read's financial position, changes in equity,
results of operations or cash flows, nor the effect and impact of the Transaction going forward.
The directors of the Company are responsible for the compilation, contents and preparation of the unaudited
pro forma financial effects of the Transaction. Their responsibility includes determining that the unaudited
pro forma financial effects have been properly compiled on the basis stated, which is consistent with the
accounting policies of Basil Read and the pro forma adjustments are appropriate for the purposes of the
unaudited pro forma financial effects disclosed pursuant to the Listings Requirements of the JSE Limited
("JSE"). The unaudited pro forma financial effects are presented in a manner consistent in all respects with
International Financial Reporting Standards ("IFRS"), with the SAICA Guide on Pro Forma Financial Information
and with the basis on which the historical financial information has been prepared in terms of accounting
policies of Basil Read as at 30 June 2012.
There has recently been volatility in the Basil Read share price which has a direct effect on certain assumptions
underlying the pro forma financial effects. Consequently, shareholders should exercise caution in reading the
pro forma financial effects. Volatility is one of the inputs in the option pricing model and impacts on the value
of the option and the economic cost. Due to the fact that volatility will change at the effective date of the
transaction the IFRS 2 charge will be recalculated on the effective date. Volatility has been calculated based
on a 4 year period.
Before the After Initial After the %
Transaction Ordinary Shares Transaction impact
Earnings per share (cents) 17.41 18.04 (9.89) (156.8)
Headline earnings per share (cents) 14.75 15.53 (12.39) (184.0)
Diluted earnings per share (cents) 17.41 18.04 (9.89) (156.8)
Diluted headline earnings per share (cents) 14.75 15.53 (12.39) (184.0)
Net asset value per share (cents) 1476.05 1459.96 1457.30 (1.3)
Tangible net asset value per share (cents) 830.76 853.30 850.64 2.4
Weighted average number of shares in issue
net of treasury shares ('000) 123 798 131 681 131 681
Before the After Initial After the %
Transaction Ordinary Shares Transaction impact
Diluted weighted average number of shares
in issue ('000) 123 798 131 681 131 681
Number of shares in issue net of treasury
shares ('000) 123 803 131 686 131 686
Diluted number of shares in issue ('000) 123 803 131 686 131 686
Notes and assumptions in calculating the pro forma financial effects:
1. The financial information in the "Before the Transaction" column has been based on the unaudited consolidated abridged
interim financial statements of Basil Read for the six months ended 30 June 2012.
2. The effects on earnings, diluted earnings, headline earnings and diluted headline earnings per share are based on the
following assumptions:
a. The Transaction was effective 1 January 2012.
b. There is no IFRS 2 impact on the issue of the Initial Ordinary Shares as the issue price of R12.56 per share is above the
closing market price of R8.10 per share on Friday, 31 August 2012, being the last practical date used for calculating the
pro forma financial effects. To the extent that the issue price is at a discount to the market price on the issue date, an
IFRS 2 charge equivalent to the extent of the discount will be charged to the income statement.
c. The economic substance of the issue of the "A" Ordinary Shares is the granting of a call option on Basil Read shares.
A once-off IFRS 2 charge on the issue of "A" Ordinary Shares of R32.9 million has been accounted for. On initial
recognition, being the date on which the "A" Ordinary Shares are issued, the derivative financial liability will be measured
at fair value using a Monte Carlo simulation based option pricing model. The assumptions used in this model for
purposes of the pro forma financial effects include a closing spot price of R8.10 per share as at 31 August 2012, being
the latest practical date, volatility of 34 percent and a dividend yield that ranges between 3.7 percent and 6.3 percent
during the term of the option. To the extent that the actual spot price on initial recognition is higher than the assumed
spot price of R8.10 used for purposes of illustrating the pro forma financial effects, the actual IFRS 2 charge will exceed
the R32.9 million pro forma IFRS 2 charge. The converse will also apply.
d. The calculation of diluted earnings and diluted headline earnings per share at reporting dates is determined on the
number of shares to be issued for no consideration which is calculated as the difference between the average market
price of Basil Read shares for the period, minus the value of the notional loan at the reporting date. Based on the share
price of Basil Read on 31 August 2012 and the fair value of the notional loan, there is currently no diluting effect arising
on the issue of the "A" Ordinary Shares.
e. The cash proceeds from the issue of the Initial Ordinary Shares and the "A" Ordinary Shares will be used to repay
interest bearing debt at an average rate of 6.4 percent, before taxation, which interest saving thereon is of a continuing
nature.
f. Tax at 28 percent on the interest adjustment has been applied.
g. Once-off transaction costs of R7.7 million excluding VAT have been apportioned equally between equity and profit and
loss and are once-off in nature.
3. The effects on net asset value per share and tangible net asset value per share are based on the following assumptions:
a. The Transaction was effective 30 June 2012.
b. The issue of 7 883 243 Initial Ordinary Shares at R12.56 per share for a cash consideration of R99 013 532.08. To the
extent that the issue price is at a discount to the market price on the issue date, an IFRS 2 charge equivalent to the
extent of the discount will be charged to the income statement.
c. The issue of 33 607 507 "A" Ordinary Shares issued of at R0.01 per share for a cash consideration of R336 075.07.
The economic substance of the issue of the "A" Ordinary Shares is the granting of a call option on Basil Read shares.
A once-off IFRS 2 charge on the issue of "A" Ordinary Shares of R32.9 million has been accounted for. On initial
recognition, being the date on which the "A" Ordinary Shares are issued, the derivative financial liability will be measured
at fair value using a Monte Carlo simulation based option pricing model. The assumptions used in this model for
purposes of the pro forma financial effects include a closing spot price of R8.10 per share as at 31 August 2012, being
the latest practical date, volatility of 34 percent and a dividend yield that ranges between 3.7 percent and 6.3 percent
during the term of the option. To the extent that the actual spot price on initial recognition is higher than the assumed
spot price of R8.10 per share used for purposes of illustrating the pro forma financial effects, the actual IFRS 2 charge
will exceed the R32.9 million pro forma IFRS 2 charge. The converse will also apply.
d. The cash proceeds from the issue of the Initial Ordinary Shares and the "A" Ordinary Shares will be used to repay debt.
e. Once-off transaction costs of R7.7 million excluding VAT have been apportioned equally between equity and profit and
loss and are once-off in nature.
4. There are no post balance sheet events which need adjustment to the pro forma financial information.
The summarised unaudited pro forma consolidated statement of financial position and consolidated income statement are
presented in Annexure 1 of the BBBEE Circular.
The unaudited pro forma financial information should be read in conjunction with the Independent Reporting Accountants'
limited assurance report thereon as presented in Annexure 2 in the BBBEE Circular.
4. CAUTIONARY ANNOUCEMENT
Basil Read shareholders are reminded that Basil Read is currently trading under cautionary which was released
on SENS on 2 July 2012 and renewed on 14 August 2012 and on 23 August 2012. Such announcements relate
to a separate transaction.
Johannesburg
28 September 2012
Corporate advisor to Basil Read
Deloitte
Corporate Finance Division
Deloitte & Touche
Lead and transaction sponsor to Basil Read
Deloitte & Touche Sponsor Services (Pty) Ltd
(Incorporated in the Republic of South Africa)
(Registration number 1996/000034/07)
Attorneys to Basil Read
Werksmans Attorneys
RamsayWebber
Attorneys, Notaries & Conveyancers
Independent expert
BDO
Reporting accountants and auditors
PWC
Corporate advisor and fund manager to SIOC
Arkein Capital Partners
Leading Capital Project Investment
Investment bank and corporate advisor to SIOC
Nedbank Capital
Attorneys to SIOC
Schindlers
Attorneys - Conveyancers - Notaries
Sponsor to Basil Read
Macquarie
Date: 28/09/2012 05:23:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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