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Conclusion Of Share Sale Agreement, Pro Forma Financial Effects And Withdrawal Of Cautionary Announcement
Sephaku Holdings Limited
(Incorporated in the Republic of South Africa)
(Registration number 2005/003306/06)
Share code: SEP ISIN: ZAE000138459
("Sephaku Holdings" or "the Company")
Conclusion of share sale agreement, pro forma financial effects
and withdrawal of cautionary announcement
1. Introduction
Further to the detailed cautionary announcement dated 3 October 2012 ("Previous Announcement"), Sephaku Holdings is pleased to
announce that the Company concluded a sale of shares agreement with the existing shareholders of Métier Mixed Concrete Proprietary
Limited ("Métier Mixed Concrete") being KJ Capes ("Capes"), the JTR Trust, RS Thompson ("Thompson") and WM Witherspoon
("Witherspoon") (together, "the Sellers") and Métier Mixed Concrete, on 7 November 2012 ("the Acquisition Agreement") to acquire
the entire issued share capital of Métier Mixed Concrete, with effect from 1 September 2012 ("the Acquisition").
2. Purchase consideration
As detailed in the Previous Announcement, the total nominal purchase consideration payable for Métier Mixed Concrete is R365 million
and will consist of a combination of cash payments and the issue of fully paid Sephaku Holdings securities of no par value ("Sephaku
Shares") to the Sellers, to be settled as follows:
2.1 On closing:
2.1.1 an initial cash payment of R110 million;
2.1.2 the issue of five million Sephaku Shares at an issue price of R6 per Sephaku Share at a total issue price of R30 million
("First Tranche Consideration Shares"); and
2.1.3 the issue of 11.1 million Sephaku Shares at an issue price of R9 per Sephaku Share at a total issue price of R100 million
("Second Tranche Consideration Shares").
2.2 On 1 December 2014:
2.2.1 a final cash payment of R125 million; and
2.2.2 the issue of an additional number of Sephaku Shares ("Additional Consideration Shares"), but only if the 11.1 million
Second Tranche Consideration Shares multiplied by the 60-day volume weighted average price of the Sephaku Shares
at 30 November 2014 is less than R100 million, subject to a maximum Sephaku Share price of R9 and a minimum
Sephaku Share price of R4.
3. Pro forma financial effects
The unaudited pro forma financial effects of the Acquisition are provided for illustrative purposes only, to indicate the effect of the
Acquisition on the earnings per Sephaku Share, diluted earnings per Sephaku Share, headline loss per Sephaku Share and diluted
headline loss per Sephaku Share of Sephaku Holdings, calculated as if the Acquisition took effect on 1 July 2011, and to show the
effect of the Acquisition on the net asset value per Sephaku Share and tangible net asset value per Sephaku Share, calculated as if
the Acquisition took effect on 30 June 2012. Because of their nature, the unaudited pro forma financial effects may not fairly present
Sephaku's financial position, changes in equity, results of operations or cash flows. The unaudited pro forma financial effects have
been compiled from Sephaku's published audited consolidated results for the financial year ended 30 June 2012 and are presented
in a manner consistent with the format and accounting policies adopted by Sephaku Holdings and have been adjusted as described
in the notes below. The Directors are responsible for the preparation of the pro forma financial effects as set out below.
Column A Column B
Audited Adjustments Pro forma
12 months ended relating to the after the
30 June 2012 Acquisition Acquisition
Basic earnings per share from total operations (cents) 0.58 4.03 4.61
Diluted earnings per share from total operations (cents) 0.53 3.73 4.26
Headline (loss)/earnings per share (cents) (13.27) 5.22 (8.05)
Diluted headline (loss)/earnings per share (cents) (12.17) 4.74 (7.44)
Net asset value per share (cents) 391.54 35.61 427.15
Tangible net asset value per share (cents) 391.54 (123.20) 268.34
Shares in issue at year-end 171 790 732 16 111 111 187 901 843
Basic weighted average number of shares 171 080 349 16 111 111 187 191 460
Diluted weighted average number of shares 186 503 819 16 111 111 202 614 930
Notes:
1. The information as reflected in column A has been extracted, without adjustment, from Sephaku Holdings' published audited consolidated results for
the financial year ended 30 June 2012.
2. The effects as reflected in column B on the earnings per Sephaku Share, diluted earnings per Sephaku Share, headline loss per Sephaku Share and
diluted headline loss per Sephaku Share are based on the following assumptions and information, that:
a. the Acquisition was effective on 1 July 2011 and, consequently, Métier Mixed Concrete's consolidated results for the financial year ended
29 February 2012 was consolidated into the results of Sephaku Holdings with effect from 1 July 2011;
b. the total purchase consideration of R365 million was settled on 1 July 2011, resulting in:
i. a cash payment of R235 million, which was financed through long-term acquisition finance incurring interest at 10.1% (which approximates
the three-month JIBAR rate as at 1 July 2011 plus 4.5%). The interest expense will have a continuing effect on Sephaku Holdings;
ii. the issue of five million Sephaku Shares at an issue price of R6 per Sephaku Share amounting to R30 million; and
iii. the issue of 11.1 million Sephaku Shares at an issue price of R9 per Sephaku Share amounting to R100 million;
c. no capital repayments of the acquisition finance has been assumed over the period; and
d. transaction costs amounting to R1 million pertaining to the Acquisition was incurred.
3. The effects as reflected in column B on the net asset value and tangible net asset value are based on the following assumptions and information, that:
a. the Acquisition was effective on 30 June 2012 and, consequently, Métier Mixed Concrete's consolidated results for the financial year ended
29 February 2012 was consolidated into the results of Sephaku Holdings;
b. the total purchase consideration of R365 million was settled on 30 June 2012, resulting in:
i. a cash payment of R235 million, which was financed through long-term acquisition finance;
ii. the issue of five million Sephaku Shares at an issue price of R6 per share amounting to R30 million; and
iii. the issue of 11.1 million Sephaku Shares at an issue price of R9 per share amounting to R100 million;
c. a preliminary allocation of the purchase price, based on the current book value/net asset value of the assets and liabilities of the Métier Mixed
Concrete as reflected in the historical financial results as at 29 February 2012 resulted in R298.4 million of goodwill arising from the Acquisition.
A final allocation of the purchase price will be performed as at the acquisition date, in accordance with the provisions of IFRS 3: Business
Combinations and accordingly, the final goodwill amount to be determined on acquisition may differ to that reflected herein; and
d. that no transaction costs pertaining to the Acquisition was incurred.
If the Sephaku Shares are issued at R4 per share as described in paragraph 2.2.2 above, the effect on the above pro forma financial
results as a result of the additional Sephaku Shares in issue will be as follows:
Column A Column B
Audited Adjustments Pro forma
12 months ended relating to the after the
30 June 2012 Acquisition Acquisition
Basic earnings per share from total operations (cents) 0.58 3.71 4.29
Diluted earnings per share from total operations (cents) 0.53 3.45 3.99
Headline (loss)/earnings per share (cents) (13.27) 5.78 (7.49)
Diluted headline (loss)/earnings per share (cents) (12.17) 5.21 (6.96)
Net asset value per share (cents) 391.54 6.21 397.75
Tangible net asset value per share (cents) 391.54 (141.67) 249.87
Shares in issue at year-end 171 790 732 30 000 000 201 790 732
Basic weighted average number of shares 171 080 349 30 000 000 201 080 349
Diluted weighted average number of shares 186 503 819 30 000 000 216 503 819
4. Suspensive conditions
The Acquisition Agreement is subject to the fulfilment or waiver of, inter alia, the following suspensive conditions:
4.1 the approval of the respective boards of directors of Sephaku and Métier Mixed Concrete of the Acquisition Agreement, by no
later than the posting date of the circular to shareholders referred to in paragraph 5 below, or 30 November 2012;
4.2 the passing of an ordinary resolution by the shareholders of Sephaku, approving implementation of the transactions contemplated
in the Acquisition Agreement and authorising the directors to issue the First Tranche Consideration Shares, Second Tranche
Consideration Shares and Additional Consideration Shares) by no later than 31 January 2013;
4.3 the conclusion of employment agreements between Métier Mixed Concrete and each of Capes, Thompson and Witherspoon as
executive directors of that company, until at least 31 December 2015, by no later than the posting date of the circular referred
to in paragraph 5 below; and
4.4 the obtaining of the approval of the Competition Commission in terms of the Competition Act, 1998 of the "merger" resulting
from the implementation of the provisions of the Acquisition Agreement, by no later than 28 February 2013.
5. Circular to shareholders
A circular to Sephaku shareholders regarding the Acquisition and incorporating a notice convening a shareholders' meeting of the
Company to obtain the approvals referred to in 4.2, is in the course of being prepared and is expected to be posted by no later than
Wednesday, 12 December 2012.
6. Withdrawal of cautionary announcement
As all the information as required in terms of the Listings Requirements of the JSE Limited have now been published, shareholders of
Sephaku Holdings are advised that caution is no longer required to be exercised when dealing in their securities.
Johannesburg
8 November 2012
Corporate advisor and transaction sponsor to Sephaku Holdings
Sasfin Capital
(A division of Sasfin Bank Limited)
Sponsor
Questco
Corporate Advisory
Legal advisors to Sephaku Holdings
brink falcon hume
Reporting accountants and Auditors
MOORE STEPHENS
Date: 08/11/2012 05:48:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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