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The Restructuring of AFGRI’s International Businesses and a Small Related Party Transaction
AFGRI Limited
Registration Number: 1995/004030/06
(Incorporated in the Republic of South Africa)
ISIN: ZAE000040549
JSE share code: AFR
("AFGRI" or "the Company")
THE RESTRUCTURING OF AFGRI’s INTERNATIONAL BUSINESSES AND A SMALL
RELATED PARTY TRANSACTION
INTRODUCTION
AFGRI Operations Limited, a wholly owned subsidiary of the Company ("AFGRI
Operations”) and various international subsidiaries of AFGRI Operations (“AFGRI
International”) have entered into a series of intra–group transactions in terms of which inter
alia AFGRI Operations has restructured its African businesses in to a Mauritius holding
company and the remainder of its international businesses into a wholly owned subsidiary of
AFGRI ("the Transaction").
1. THE TRANSACTION
1.1 Rationale
1.1.1 A strategic decision has been made by AFGRI to effectively manage its African
business from Mauritius.
1.1.2 Mauritius is recognized as a strategic global business centre and has proven itself
as one of the most financially sound economies in SADEC.
1.1.3 AFGRI is expecting that the Transaction will attract international investors who wish
to invest in food and agricultural businesses in the African continent.
1.1.4 The Transaction will furthermore ensure a cash benefit for the Agri Sizwe
Empowerment Trust (Master’s reference no. IT 9911/04) (“AST”), AFGRI
Operations’ BEE Partner.
1.2 Terms of the Transaction
In terms of the Transaction:
1.2.1 AFGRI Grain Marketing Proprietary Limited sells its shares and claims in AFGRI
Mauritius Investment Limited (“AFGRI Mauritius”) to AFGRI Operations.
1.2.2 AFGRI Operations sells its shares and claims in:
1.2.2.1 AFGRI Corporation Limited (Zambia);
1.2.2.2 Bnot Harel Nigeria Limited;
1.2.2.3 AFGRI Zimbabwe Equipment Private Limited (“AFGRI Zimbabwe”);
1.2.2.4 Collateral Management International Limited; and
1.2.2.5 AFGRI Ghana Company Limited;
to AFGRI Mauritius in exchange for additional shares in AFGRI;
1.2.3. AFGRI Operations sells its shares and claims in:
1.2.3.1. AFGRI Australia Pty Ltd;
1.2.3.2. Afrgitech Limited; and
1.2.3.3. AFGRI Mauritius;
to Betakilo Garage Proprietary Limited, a wholly owned subsidiary of AFGRI
Limited. (“AFGRI Subco”)
1.2.4. As part of the transaction contemplated in terms of paragraphs 1.2.2 and 1.2.3
above, AST sells its 26.77 % undivided interest in AFGRI International to AFGRI
Subco for a purchase consideration of R 55.7 million payable in cash; and
1.2.5. AFGRI Operations declares a dividend to AFGRI Limited equal to the amount it
received from AFGRI Subco in terms of the transactions in paragraph 1.2.3 above.
1.3. Unaudited Pro Forma Financial Effects
1.3.3. Unaudited pro forma financial effect
The table below sets out the unaudited pro forma financial effects on AFGRI’s
earnings per share (“EPS”) headline EPS (“HEPS”), net asset value per share
(“NAV”) and tangible NAV (“TNAV”).
The unaudited pro forma financial effects have been prepared using accounting
policies that comply with International Financial Reporting Standards and that are
consistent with those applied in the interim group results of AFGRI for the six
months ended 31 December 2012.
The unaudited pro forma financial effects, which are the responsibility of the Board,
are provided for illustrative purposes only and, because of their pro forma nature,
may not fairly present AFGRI’s financial position, changes in equity, results of
operations or cash flow.
After
Before1 Change3,4
For the six months ended 31 December 2012 Transaction2
(cents) (cents) (%)
EPS5 33.5 32.1 -4.2%
5
HEPS 31.3 29.9 -4.5%
6
NAV 515.1 502.6 -2.4%
6
TNAV 419.1 406.6 -3.0%
Weighted average number of AFGRI shares in
335.8 335.8 0.0%
issue (millions)
Number of AFGRI shares in issue (millions) 357.4 357.4 0.0%
Notes and assumptions:
1. The AFGRI financial information reflected in the “Before” column has been extracted
from the interim group results of AFGRI for the six months ended 31 December 2012.
2. The AFGRI financial information reflected in the “After Transaction” column has been
calculated on the basis that the Transaction would be implemented based on the
interim group results of AFGRI for the six months ended 31 December 2012.
3. The change reflects the difference between the position before and after the
Transaction on a percentage basis.
4. The negative impact on EPS and HEPS is a once off impact as a result of costs
incurred in implementing the Transaction.
5. The pro forma adjustments to the published interim group statement of comprehensive
income have been calculated on the assumption that the Transaction was
implemented on 1 July 2012.
6. The pro forma adjustments to the published interim group statement of financial
position have been calculated on the assumption that the Transaction was
implemented on 31 December 2012.
1.4. Suspensive conditions
The suspensive conditions to the Transaction have been fulfilled on 30 May 2013.
2. Small related party transaction
AST had a 26.77% undivided partnership interest in the business of AFGRI Operations
and was therefore treated as a related party to AFGRI. KPMG Services Proprietary
Limited, as the independent professional expert, has confirmed that the consideration
received by AST for the disposal of their undivided partnership interest in AFGRI
International to AFGRI Subco is fair and their fairness opinion is available for inspection
at AFGRI’s registered office until 30 June 2013.
Centurion
04 June 2013
Investment Bank and Sponsor to AFGRI: Investec Bank Ltd
Independent auditors: PWC
Tax advisor: KPMG
Legal advisor to AST: Van der Merwe Attorneys
BEE Consortium: Izitsalo
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