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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').
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