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NCL
NCL
NCL - New Clicks - Sale of Discom by New Clicks
NEW CLICKS HOLDINGS LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1996/000645/06)
Share code: NCL & ISIN: ZAE000014585
("New Clicks" or "the group")
Sale of Discom by New Clicks
1. Introduction and rationale
Shareholders of New Clicks are advised that an agreement has been
concluded to sell the business of Discom as a going concern, subject
to the fulfilment of certain conditions precedent as detailed in
paragraph 4 below, to Edgars Consolidated Stores Limited ("Edcon")
("the Discom sale").
Discom is a division of New Clicks SA (Pty) Limited, a wholly-owned
subsidiary of New Clicks. Discom is a specialist retailer of African
beauty, hair care and decorative homewares to the lower to middle
income market.
The core expertise of New Clicks is in meeting the needs of middle
and upper income customers in health, beauty, home and entertainment
retailing through Clicks, Musica and The Body Shop.
New Clicks recognises that Discom serves a different customer
profile and believes the needs of its customer base can be better
served by a company which has a stronger focus on Discom`s target
market.
2. Details of the Discom sale
The effective date of the Discom sale will be the first trading day
of New Clicks of the first month at least 30 days after the
fulfilment of the last of the conditions precedent. This date is
expected to be 3 September 2007, subject to the necessary regulatory
approvals. Edcon will not assume any of the liabilities of Discom,
other than certain liabilities in respect of the employees of
Discom. All existing Discom staff will be transferred to Edcon. New
Clicks has agreed to provide warranties that are standard and
appropriate with regard to a transaction of this nature.
3. The sale consideration
The total amount payable by Edcon in terms of the Discom sale will
approximate R369 million (including goodwill and trademarks of R111
million, fixed assets and stock) which amount will be based on the
final book value of fixed assets and stock on the effective date
("the sale consideration"). The sale consideration will be reduced
by the amount of any liabilities in respect of the employees assumed
by Edcon. The sale consideration will be settled in cash. In terms
of the Discom sale New Clicks will settle the Discom trade
creditors.
The proceeds received from the Discom sale will be used to reduce
the level of the group`s shareholder funding, ultimately enhancing
return on equity.
4. Conditions precedent
The Discom sale is, inter alia, subject to:
4.1 the necessary regulatory and government approvals, including
the approval in terms of the Competition Act, No. 89 of 1998;
and
4.2 the transfer, assignment, cession or sublease of not less than
80% in number of the premises leases.
5. Financial effects of the Discom sale
The table below sets out the financial effects of the Discom sale
based on the unaudited interim results of New Clicks for the six
months ended 28 February 2007:
Per New Clicks share Notes Before After Change
(cents) (cents (%)
)
Basic earnings 1 54.3 59.5 9.6
Headline earnings 1 54.7 53.1 (2.9)
Net asset value 2 453 459 1.3
Net tangible asset value 2 311 347 11.6
It is anticipated that the impact of the sale of Discom will be
largely neutral on the group`s earnings beyond 2007.
Notes:
1. The "Before" column reflects the basic earnings and headline
earnings per New Clicks share for the six months ended 28 February
2007 calculated on the basis of a weighted average number of 342.642
million shares in issue throughout the period. The "After" column
assumes that the Discom sale was implemented on 1 September 2006 and
for:
- basic earnings per New Clicks share, reflects a profit on the
sale of Discom of R10.9 million and the after tax earnings
which would have been earned had an amount equivalent to the
sale consideration net of creditors been invested by New Clicks
at an after tax interest rate of 6.2% per annum for the six
months ended 28 February 2007 in lieu of the consolidated after
tax earnings of Discom for the six months ended 28 February
2007; and
- headline earnings per New Clicks share, reflects the after tax
earnings which would have been earned had an amount equivalent to
the sale consideration net of creditors been invested by New Clicks
at an after tax interest rate of 6.2% per annum for the six months
ended 28 February 2007 in lieu of the consolidated after tax
earnings of Discom for the six months ended 28 February 2007;
2. The net asset value per New Clicks share has been calculated based
on the book value of assets and liabilities as at 28 February 2007.
The "Before" column reflects the net asset value and net tangible
asset value per New Clicks share at 28 February 2007 calculated on
the basis of 337.651 million shares in issue at 28 February 2007.
The "After" column assumes that the Discom sale was implemented on
28 February 2007 and reflects the sale consideration in lieu of the
consolidated value of Discom at 28 February 2007.
Cape Town
1 June 2007
Investment bank Sponsor Corporate law
Investec Bank Limited Investec Bank advisers and
Corporate Finance Limited consultants
Edward Nathan
Sonnenbergs
Date: 01/06/2007 08:23:02 Produced by the JSE SENS Department.
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