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Financial Effects and Renewal of cautionary announcement
Sherbourne Capital Limited
(Previously IFCA Technologies Limited)
Incorporated in the Republic of South Africa
(Registration number 2006/030759/06)
Share code: SHB ISIN: ZAE000165403
("Sherbourne" or “the Company”)
FINANCIAL EFFECTS REGARDING THE ACQUISITION BY SHERBOURNE OF 51% OF ARKEIN
INTERNATIONAL LIMITED AND FURTHER CAUTIONARY ANNOUNCEMENT
1. INTRODUCTION
Shareholders are referred to the SENS announcement dated 18 October 2012 where it was
announced that Sherbourne entered into an agreement with Arkein International Limited (“Arkein”) to
subscribe for shares resulting in Sherbourne achieving a 51% stake in the issued ordinary share
capital of Arkein (the "Agreement”), for a total purchase consideration of US$9 562 500 to be settled
by a cash payment of US$3 750 000 (three million, seven hundred and fifty thousand United States
Dollars) in cash and US$4 218 750 through the issue of Sherbourne ordinary shares at R 0.50 (fifty
cents) per share, as well as a Control Premium of US$1 593 750 payable within three years from the
effective date of the Agreement (the "Transaction”).
As the financial effects were not disclosed in the announcement on 18 October 2012, they are set
out below.
2. FINANCIAL EFFECTS OF THE TRANSACTION ON SHERBOURNE FOR THE 6 MONTHS
ENDED 30 JUNE 2012
The unaudited pro forma financial effects of Sherbourne before and after the Transaction are based
on the reviewed results of Sherbourne for the six months ended 30 June 2012. The financial
information utilised for Arkein was extracted from the unaudited management statements of financial
position of Arkein as at 30 June 2012 and the statement of financial position of Arkein for the 6
months ended 30 June 2012. Sherbourne’s directors are satisfied with the quality of the
management accounts utilised in preparing these financial effects. The unaudited financial effects
are presented for illustrative purposes only, to provide information on how the Transaction may have
impacted on the results and financial position of Sherbourne. The unaudited pro forma financial
effects are the responsibility of Sherbourne's directors. Due to the nature of the unaudited pro forma
financial effects, they may not fairly present Sherbourne's financial position and the results of its
operations after the Transaction. The financial effects do not purport to be indicative of what the
financial results would have been, had the Transaction been implemented on a different date. The
unaudited pro forma financial information has been presented in a manner consistent in all respects
with IFRS and Sherbourne's accounting policies applied consistently throughout the period.
The financial effects of the Transaction calculated on Sherbourne are set out below:
Before the After the Transaction % change
Transaction
Earnings per share (cents)
(“EPS”) (0.89) (0.60) 33%
Headline earnings per share
(cents) (“HEPS”) (1.90) (1.44) 34%
Net asset value per share
(cents) (“NAV”) (2.82) 5.78 305%
Tangible net asset value per
share (cents) (“TNAV”) (2.82) (7.60) -170%
Weighted number of shares 452,869,475 545,869,475
Number of shares in issue 496,875,000 589,875,000
Notes:
1. The “% Change” column of the table is the result of the actual calculations whereas the “Before
the Transaction” and “After the Transaction” columns of the table are rounded figures, as
reflected in the reviewed results of Sherbourne for the period ended 30 June 2012.
2. The EPS and HEPS in the “Before the Transaction” column of the table are based on the
reviewed statement of comprehensive income of Sherbourne for the six month ended 30 June
2012, with 452 869 475 Sherbourne shares in issue (being the weighted number of ordinary
shares in issue for the six month ended 30 June 2012, net of treasury shares).
3. The EPS and HEPS in the “After the Transaction” column of the table are based on 545,869,475
Sherbourne ordinary shares in issue and the assumptions that:
- the Transaction became effective on 1 January 2012 and the purchase price was settled
on that date;
- the purchase price was settled through the issue of 93,000,000 Sherbourne ordinary
shares at 52 cents which includes the Control Premium being settled through the issue
of Sherbourne ordinary shares at 52 cents per share and a cash payment of R
31 046 625 utilising a Rand/United States Dollar exchange rate of R 8.2791; and
- the cash would have been held in a notice account at an before tax interest rate of 5%,
yielding after tax interest received of R 558 839 for the 6 month period ended 30 June
2012.
4. The NAV and TNAV in the “Before the Transaction” column of the table are based on the
reviewed statement of financial position of Sherbourne at 30 June 2012 with 452 869 475
Sherbourne shares in issue.
5. The NAV and TNAV in the “After the Transaction” column of the table are based on the
assumptions that the Transaction was completed on 30 June 2012 with 589,875,000 Sherbourne
ordinary shares in issue and the purchase price was settled through the issue of 93,000,000
Sherbourne ordinary shares at 52 cents which includes the Control Premium being settled
through the issue of Sherbourne ordinary shares at 52 cents per share and a cash payment of R
31 046 625 utilising a Rand/United States Dollar exchange rate of R 8.2791.
6. An amount of R 78,930,104 Goodwill arose from the Transaction. Goodwill is measured as the
excess of the sum of the consideration transferred, the amount of any non-controlling interests in
the acquiree, and the fair value of the acquirer's previously held equity interest in the acquiree (if
any) over the net of the Transaction date amounts of the identifiable assets acquired and the
liabilities assumed.
7. The pro forma financial effects have not been reviewed by Sherbourne’s auditors.
3. CIRCULAR TO SHAREHOLDERS
A circular relating to the Transaction, by Sherbourne of Arkein incorporating revised listing particulars
and a notice of general meeting and form of proxy will be posted to Sherbourne shareholders in due
course.
4. FURTHER CAUTIONARY ANNOUNCEMENT
Shareholders are advised that the Company has entered into negotiations regarding a potential
acquisition, which if successfully concluded may have a material effect on the price of the
Company’s securities. Accordingly, shareholders are advised to exercise caution when dealing in the
Company’s securities until a further announcement is released.
Sandton
28 January 2013
Designated Adviser: Bridge Capital Advisors (Pty) Limited
Date: 28/01/2013 08:30:00 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
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information disseminated through SENS.
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