PETMIN LIMITED - Revised pro forma financial effects of the offer

Release Date: 23/02/2017 08:05
Code(s): PET
 
Wrap Text
Revised pro forma financial effects of the offer

PETMIN LIMITED
Incorporated in the Republic of South Africa
Registration Number 1972/001062/06
Share Code JSE: PET
ISIN: ZAE000076014
(“Petmin”)

                      REVISED PRO FORMA FINANCIAL EFFECTS OF THE OFFER

 Unless otherwise indicated, capitalised words and terms contained in this announcement shall bear the same
 meanings ascribed thereto in the joint firm intention announcement published by Petmin, Capitalworks and
 Bidco on SENS on 19 December 2016 (“Announcement”).

 Shareholders are referred to the Announcement, which included the pro forma financial effects of the Offer on
 an Offer Participant who receives the Share Consideration (“Pro forma Financial Effects”). The Pro forma
 Financial Effects were based on the reviewed condensed consolidated preliminary financial results of Petmin
 for the year ended 30 June 2016.

 On 23 February 2017, Petmin published its reviewed condensed consolidated interim financial statements for
 the six months ended 31 December 2016 (“Interim Results”), on SENS. Accordingly, in terms of paragraphs
 8.25(c) and 8.28(a) of the Listings Requirements, the Pro forma Financial Effects have been updated with the
 Interim Results, as well as, a revised estimate of the once-off transaction costs attributable to the Offer
 (“Revised Pro forma Financial Effects”). The Revised Pro forma Financial Effects are set out below.

 The Revised Pro forma Financial Effects have been prepared for illustrative purposes only in order to provide
 information on how the Offer may affect the financial performance and position of Petmin and an Offer
 Participant who receives the Share Consideration, by illustrating the effect thereof on the basic and diluted
 earnings per share (“EPS”), basic and diluted headline earnings per share (“HEPS”), net asset value (“NAV”)
 and tangible net asset value (“TNAV”) of an Offer Share that an Offer Participant will be exchanging for the
 EPS, HEPS, NAV and TNAV per Bidco Linked Share, comprising 1 Bidco Ord and 1 Bidco Pref.

 The Revised Pro forma Financial Effects have been prepared to illustrate the effect of the Offer on Petmin and
 an Offer Participant who receives the Share Consideration, had the Offer been implemented on 1 July 2016
 for purposes of EPS and HEPS and on 31 December 2016 for purposes of NAV and TNAV.

 The Revised Pro forma Financial Effects set out below are the responsibility of the directors of Petmin and
 Bidco.

 The Revised Pro forma Financial Effects set out below are provided for illustrative purposes only and,
 because of their nature, may not fairly represent the financial performance and position of Petmin and an
 Offer Participant after the implementation of the Offer. The Revised Pro forma Financial Effects have been
 prepared in accordance with International Financial Reporting Standards (“IFRS”).

 The following assumptions have been made for purposes of presenting the Revised Pro forma Financial
 Effects:

•     Bidco acquires all Offer Shares from Eligible Shareholders.

•     Offer Participants elect to receive the Share Consideration in respect of 25% of the total Offer Shares,
       resulting in the issue of 132.65 million Bidco Linked Shares to Offer Participants.

•     Offer Participants elect to receive the Cash Consideration in respect of 75% of the total Offer Shares,
       resulting in a total Cash Consideration payable of R617 million to Offer Participants.

•      For purposes of capitalising Bidco in order to enable the settlement of the Cash Consideration of
        R617 million by Bidco, Capitalworks will provide a Loan of R150 million to Bidco and, through the
        Capitalworks Subscription, Capitalworks will subscribe for 291.78 million Bidco Linked Shares. The
         Loan is repayable in 12 months and shall accrue interest at the Prime Rate.

•       Bidco will issue 14.67 million Bidco B Ords to Petmin Management in terms of the Petmin Management
         Share Issue.

•       Estimated once-off transaction costs attributable to the Offer, amounting to R34.38 million, are
         expensed, of which R3.31 million is payable by Petmin and R31.07 million is payable by Bidco.
         Capitalworks will provide a loan to fund the transaction costs payable by Bidco. The loan is repayable in
         2 years and shall accrue interest at the Prime Rate.

•       Bidco will be treated as an investment entity in terms of IFRS 10: Consolidated Financial Statements
        and accounts for its investment in Petmin at fair value through profit or loss. The fair value of the
        investment is considered to be the consideration paid by Bidco for the Offer Shares.

•       Bidco Prefs are classified as a debt instrument.

•       There are no post balance sheet events which require adjustment.

•       All adjustments, with the exception of the once-off transaction costs attributable to the Offer, are
         expected to have a continuing effect.
                                  


                                                      Before          Adjusted                               After the Offer
                                                      the Offer       before the       Bidco Ord         Bidco          Bidco        Percentag
                                                                             Offer                                         Pref             Linked      e change
                                                                                                                                                  Share

    Basic EPS (cents)                        8.30              7.79                (13.26)             10.34            (2.92)          (135%)
    Diluted EPS (cents)                     8.30              7.79                (13.26)             10.34            (2.92)          (135%)
    Basic HEPS (cents)                     8.30              7.79                 (13.26)            10.34            (2.92)          (135%)
    Diluted HEPS (cents)                  8.30              7.79                 (13.26)            10.34             (2.92)         (135%)
    NAV per share (cents)                242.94         242.42             (6.98)             159.90          152.92          (37%)
    TNAV per share (cents)              242.94         242.42             (6.98)             159.90          152.92          (37%)
    Weighted average                       530 615       530 615           439 095         424 429       424 429       (20%)
    number of shares in issue
    (‘000)
    Number of shares in issue         530 615        530 615           439 095         424 429       424 429        (20%)
    (‘000)

 Notes:

 1.  The financial information in the “Before the Offer” column has been derived from the Interim Results.

 2.   The “Adjusted before the Offer” column has been derived from the Interim Results and adjusted for
        estimated once-off transaction costs attributable to the Offer, which are payable by Petmin. Total
        cumulative once-off costs payable by Petmin amount to R3.31 million, of which R0.57 million has already
        been expensed in the Interim Results.

 3.    The financial information included in the “After the Offer” column has been derived by taking the Bidco pro
         forma financial effects pursuant to the Offer (based on Bidco’s audited financial statements as at
         incorporation, adjusted for the Offer) and multiplying these results by the exchange ratio of 1 Bidco Linked
         Share for every 1 Offer Share, to provide the pro forma financial effects of the Offer on an Offer
         Participant who receives the Share Consideration. The individual components of the Bidco Linked Share,
         being the Bidco Ord and the Bidco Pref, have been presented separately and then aggregated.

        3.1.   The financial information included in the “Bidco Ord” column has been derived by utilising the
                 number and weighted average number of Bidco Ords in issue, inclusive of the Bidco B Ords.

        3.2.   The financial information included in the “Bidco Pref” column is not presented in terms of IFRS and
                  has been presented for illustrative purposes only and to provide Shareholders with additional
                  information. The EPS and HEPS have been calculated by dividing the finance charge accrual on
                  the Bidco Prefs by the weighted average number of Bidco Prefs in issue. The NAV and TNAV
                  reflect the issue price of the Bidco Pref.

         3.3.   The financial information included in the “Bidco Linked Share” column is not presented in terms of
                  IFRS and has been presented for illustrative purposes only and to provide Shareholders with
                  additional information. This column represents the aggregate of the “Bidco Ord” and “Bidco Pref”
                  columns. The number and weighted average number of shares in issue represents the Bidco
                  Linked Shares only, excluding the Bidco B Ords.

 4.    The “Percentage change” column compares the “Bidco Linked Share” column included in the “After the
        Offer” column with the “Before the Offer” column.

  For the avoidance of doubt, the “Before the Offer” column illustrates a direct interest in Petmin, which
  represents consolidated operating results of Petmin and its subsidiaries, whereas the “After the Offer” column
  illustrates an indirect interest in Petmin through Bidco, an investment entity that accounts for its investment in
  Petmin at fair value through profit or loss i.e. the operating results of Petmin and its subsidiaries are not
  reflected in the financial results of Bidco.

  The Revised Pro forma Financial Effects have not been reviewed or reported on by the reporting accountants
  and auditors of Petmin.


 Johannesburg
 23 February 2017

 Corporate advisor to Capitalworks and Bidco
 One Capital Advisory (Proprietary) Limited

 Attorneys to Capitalworks and Bidco
 Cliffe Dekker Hofmeyr Inc.

 Attorneys to Petmin
 Cliffe Dekker Hofmeyr Inc.

 Sponsor and corporate advisor to Petmin
 River Group




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Date: 23/02/2017 08:05:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). 
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