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BASIL READ HOLDINGS LIMITED - Unaudited Pro Forma Financial effects relating to the disposal by Basil Read of 100% of TWP Holdings (PTY) Limited

Release Date: 21/12/2012 16:36
Code(s): BSR     PDF:  
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Unaudited Pro Forma Financial effects relating to the disposal by Basil Read of 100% of TWP Holdings (PTY) Limited

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")

UNAUDITED PRO FORMA FINANCIAL EFFECTS RELATING TO THE DISPOSAL BY BASIL
READ OF 100% OF TWP HOLDINGS (PTY) LTD TO WORLEYPARSONS RSA GROUP (PTY) LTD
AND WITHDRAWAL OF EXISTING CAUTIONARY ANNOUNCEMENT

1.   INTRODUCTION

Basil Read shareholders are referred to the announcements released on the
Securities Exchange News Service (“SENS”) on Tuesday, 23 October 2012 (the
“Initial Transaction Announcement”) and Wednesday, 5 December 2012,
respectively, regarding the agreement dated 23 October 2012, entered into
with WorleyParsons Limited whereby WorleyParsons RSA Group (Pty) Ltd, will
acquire the entire issued share capital held by Basil Read in TWP Holdings
(Pty) Ltd (“TWP”) for a cash consideration of ZAR900 million (the “Proposed
Transaction”). The terms defined in the Initial Transaction Announcement
apply throughout this announcement unless otherwise stated.

For the purposes of this announcement, the TWP Carve-Out group comprises
TWP, and the following subsidiaries and joint ventures that will be legally
bound together through a reorganisation that will occur prior to the
Proposed Transaction: TWP Limpopo Engineers (Pty) Ltd, TWP Projects (Pty)
Ltd, Effluent Technologies (Pty) Ltd, TWP Environmental Services (Pty) Ltd,
TWP Projects DRC SPRL, TWP Sud-America and Lisinfo 203 Trading (Pty) Ltd (a
joint venture of TWP Holdings (Pty) Ltd). The TWP Carve-Out group therefore
excludes, Basil Read Matomo Projects (Pty) Ltd, TWP Matomo Process Plant
(Pty) Ltd, TWP Investments (Pty) Ltd, LYT Architecture (Pty) Ltd
(previously TPSP Architects (Pty) Ltd) and TWP Australia (Pty) Ltd,
together the “Excluded Companies”. The Excluded Companies will continue to
operate as wholly-owned subsidiaries of Basil Read, on a standalone basis
within the Group.

2.   UNAUDITED PRO   FORMA   FINANCIAL   EFFECTS   RELATING   TO   THE   PROPOSED
     TRANSACTION

The table below sets out the unaudited pro forma financial effects of the
Proposed Transaction on the latest published unaudited results of Basil
Read for the six months ended 30 June 2012, after accounting for the
recently concluded BBBEE transaction for an effective holding of 25.1% in
the total issued share capital of Basil Read. 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 BBBEE Transaction and Proposed 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 BBBEE
Transaction and the Proposed Transaction. Their responsibility includes
determining that the unaudited pro forma financial effects have been
properly compiled on the basis stated, and that it is consistent with the
accounting policies of Basil Read and that 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.

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.

    Per Basil    Before the    Unaudited        Percentage   Unaudited        Percentage
    Read share   BBBEE         pro forma        change       pro forma        change
    (cents)      Transaction   After the        from (1)     After the        from (2)
                 (1)           BBBEE            to (2)       Proposed         to (3)
                               Transaction                   Transaction
                               - Before                      (3)
                               the
                               Proposed
                               Transaction
                               (2)
    Earnings           17.41      (30.89)       (277.4)           150.45        587.0
    per share
    (cents)
    Headline           14.75      (33.40)       (326.4)           (32.62)          2.3
    earnings
    per share
    (cents)
    Diluted            17.41      (30.89)       (277.4)            150.45        587.0
    earnings
    per share
    (cents)
    Diluted            14.75      (33.40)       (326.4)           (32.62)          2.3
    headline
    earnings
    per share
    (cents)
    Net asset       1,476.05     1,457.30        (1.3)           1,626.40         11.6
    value per
    share
    (cents)
    Tangible          830.76       850.64         2.4            1,312.69         54.3
    net asset
    value per
    share
    (cents)
    Weighted         123,798      131,681                         131,681
    average
    number of
    shares in
    issue net
    of
 treasury
 shares
 („000)
 Diluted            123,798      131,681                          131,681
 weighted
 average
 number
 of shares
 in issue
 („000)
 Number of          123,803      131,686                          131,686
 shares in
 issue net
 of
 treasury
 shares
 („000)
 Diluted            123,803      131,686                          131,686
 number of
 shares in
 issue
 („000)

Notes:
1. The unaudited pro forma financial effects are based on the
consolidated abridged interim financial statements of Basil Read for the
six months ended 30 June 2012.
2. The “Unaudited pro forma After the BBBEE Transaction - Before the
Proposed Transaction” represents the effects after the BBBEE Transaction
on the following assumptions:
     The BBBEE Transaction was effective 1 January 2012 for purposes of
     the effects on earnings and headline earnings and on 30 June 2012
     for the effects on net asset and tangible net asset value per share.
     There is no IFRS 2 impact on the issue of the 7,883,243 ordinary
     shares issued to SIOC CDT Investment Holdings (Pty) Ltd ("SIOC") as
     the issue price of R12.56 per share was above the closing market
     price of R9.68 per share on Thursday, 15 November 2012 being the
     date of issue of the shares.
     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 R60.5 million as
     well as 50% of the transaction costs have been accounted for as
     adjustments. On initial recognition, being the date on which the "A"
     ordinary shares were issued i.e. 15 November 2012, the derivative
     financial liability was measured at fair value using a Monte Carlo
     simulation based option pricing model. The assumptions used in this
     model include a closing spot price of R9.68 per share as at
     15 November 2012, volatility of 34 percent and a dividend yield that
     ranges between 1.4 percent and 3.3 percent during the term of the
     option.
     The cash proceeds from the issue of the 7,883,243 ordinary shares,
     net of transaction costs attributable to the issue of these shares,
       were used to reduce the bank overdraft at an average rate of 6.5
       percent applied for a six month period, before taxation, which
       interest saving thereon is of a continuing nature.
       Interest is assumed, based on the R3.5 million increase in bank
       overdraft representing the net amount of the transaction costs
       attributable to the issue of the "A" ordinary shares and the cash
       proceeds relating to the issue of the "A" ordinary shares at an
       interest rate of 6.5 percent applied for a six month period.
       Tax at 28 percent on the interest adjustment has been applied.
       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.
       The calculation of diluted earnings and diluted headline earnings
       per share at reporting dates has been determined on the number of
       shares issued for no consideration which was calculated as the
       difference between the closing market price of Basil Read shares on
       the date of issue, being 15 November 2012, minus the value of the
       notional loan at the issue date. Based on the share price of Basil
       Read on 15 November 2012 and the fair value of the notional loan,
       there is currently no diluting effect arising on the issue of the
       "A" ordinary shares.
  3. The “Unaudited pro forma After the Proposed Transaction” represents
  the effects after the Proposed Transaction on the following assumptions:
       The Proposed Transaction was effective 1 January 2012 for purposes
       of the effects on earnings and headline earnings and on 30 June 2012
       for the effects on net asset and tangible net asset value per share.
       The profit on disposal has been calculated as the difference between
       the sale proceeds of R900 million net of capital gains tax and the
       carrying amount of the TWP Carve Out group as at 30 June 2012. The
       purchase consideration will be adjusted on the effective date for
       net debt and net working capital.
       The cash proceeds from the disposal of the TWP Carve Out group will
       be used in part to repay debt in the amount of R375 million as and
       when the debt matures, with the balance of R450.4 million (net of
       capital gains tax) increasing cash resources. To calculate the
       interest saved / earned, a combined rate of 6 percent has been
       applied, being the weighted average rate of interest saved on
       interest-bearing borrowings and interest earned on cash invested in
       the money market. Interest has been calculated for a six month
       period. Tax at 28 percent on the interest adjustment has been
       applied.
       Once-off transaction costs of R18.5 million have been allocated to
       profit and loss and are once off in nature. Interest at a weighted
       average rate of 6 percent has been provided on the reduction in cash
       due to the payment of the transaction costs. Tax at the capital
       gains rate of 18.6% has been applied to the transaction costs. Tax
       at 28% on the interest adjustment has been applied.

3. CIRCULAR   AND   SALIENT   DATES   AND   TIMES   RELATING   TO   THE   PROPOSED
TRANSACTION
A circular containing full details of the Proposed Transaction and
incorporating a notice of general meeting of Basil Read shareholders will
be posted to shareholders, in due course.

In addition, a further announcement regarding the salient dates and times
relating to the implementation of the Proposed Transaction will be
announced to shareholders in due course.

4. WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT

Basil Read shareholders are referred to the cautionary announcements
released by the Company on SENS on Monday, 02 July 2012, Tuesday, 14 August
2012, Thursday, 23 August 2012, Friday, 5 October 2012, Tuesday, 23 October
2012 and Wednesday, 5 December 2012, respectively, and are advised that as
the pro forma financial effects of the Proposed Transaction have now been
published, shareholders need not continue to exercise caution when dealing
in Basil Read?s securities.


Johannesburg
21 December 2012


For further information please contact:

Marius Heyns
Chief Executive Officer: Basil Read
Office: +27 11 418 6300

Financial Adviser, JSE Transaction Sponsor and JSE Sponsor
Macquarie First South Capital (Pty) Ltd

Legal advisers
Werksmans Attorneys

Investor Relations Advisers
College Hill (Pty) Ltd

Date: 21/12/2012 04:36:00 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.

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