| Wed 27 Jun 2007, 14:39 | | YBA - Yomhlaba Resources Limited - Amended pro for |
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YBA
YBA
YBA - Yomhlaba Resources Limited - Amended pro forma financial effects
YOMHLABA RESOURCES LIMITED
(Registration number 1994/009012/06)
Share code: YBA
ISIN: ZAE000060281
("Yomhlaba" or "the Company")
AMENDED PRO FORMA FINANCIAL EFFECTS
1. INTRODUCTION
Shareholders of Yomhlaba are referred to the announcement dated 14 June 2007 and
the circular dated 8 June 2007 ("the circular") in which pro forma financial
effects were disclosed relating to, inter alia, a proposed restructuring of the
Company`s balance sheet, the consolidation of the Company`s shares on a one-for-
ten basis , an empowerment transaction which would transfer control of Yomhlaba
to Royal Bafokeng Capital (Pty) Ltd and the acquisition of two operating coal
mines through the acquisition of the shares in and claims against Umlabu
Colliery (Pty) Limited( "Umlabu") ("the Umlabu acquisition") and Ilanga Coal
Mines (Pty) Limited ("Ilanga") ("the Ilanga acquisition") (jointly "the
acquisitions") (collectively, "the Transactions").
The JSE Limited ("the JSE") has advised the Company that it referred the pro
forma financial statements presented in the circular to the GAAP Monitoring
Panel ("GMP") for review of the accounting treatment of the acquisitions. (The
GMP is an advisory body of the JSE mandated to advise the JSE on accounting
related matters.)
The matters contained in the GMP report are summarised below:
the consolidated pro forma balance sheet in the circular, reflected a
"revaluation reserve" being the net of the goodwill arising on the acquisition
of Ilanga and the credit arising on the acquisition of Umlabu, accounted for as
being one indivisible transaction.
in terms of IFRS 3, on consolidation by Yomhlaba of Ilanga, the pro forma
balance sheet should have reflected goodwill of approximately R35.1m as an
asset, being the excess price paid above the underlying asset value identified
and valued at date of acquisition. This goodwill should be tested for
impairment and, if impaired, should be written off in the income statement; and
in terms of IFRS 3, on consolidation by Yomhlaba of Umlabu, the pro forma
consolidated financial statements should have reflected the R142.9m discount
arising on the acquisition (being the extent to which the Umlabu net asset
value identified and valued at date of acquisition exceeded the price paid) with
this discount immediately passed through the income statement as a profit rather
than being credited to a revaluation reserve.
IAS 1 does not permit the set-off of goodwill arising on one acquisition against
a credit arising on another acquisition, hence the acquisitions should be
accounted for separately.
Based on the advice received from the GMP, the JSE has requested the company to
republish the pro forma financial effects in order to address the above-
mentioned matters.
In essence, the acquisitions were originally accounted for as one indivisible
transaction and the revaluation of the mineral rights was recognised in terms of
IFRS 6 but, based on the GMP`s request, the acquisitions are now being accounted
for separately and in accordance with IFRS.
The revised pro forma effects reflecting the immediate impairment of the
goodwill relating to the Ilanga acquisition and the recognition of the discount
relating to the Umlabu acquisition are set out below.
Compendium (Pretoria) Incorporated, the reporting accountants for the company,
has signed off on the revised pro forma financial statements.
2. AMENDMENTS TO THE PRO FORMA FINANCIAL EFFECTS
The full revised pro forma financial effects, being section 15 together with
appendix 8 of the circular and the revised reporting accounts report on the
figures, is available for inspection at the registered office of the Company or
at www.bafokengcapital.com from 28 June 2007. Shareholders are advised to read
the revisions below together with the previously published circular in order to
obtain a full understanding thereof.
Amendments to paragraph 15.2 of the circular
Set out in the table below are the columns pertaining to the pro forma financial
effects of the Transactions, which have been accordingly amended. These figures
should be compared with the table set out in paragraph 15.2 of the circular.
COLUMN C Percentage COLUMN D Percentage
After the change (%) After the change (%)
Transactions from conversion of COLUMN C to
(cents per reviewed the COLUMN D
share) financials shareholders`
loans (cents
per share)
Earnings 33,5 >100% 29,0 (13.5)%
Headline (1,1) >100% (0,9) 18.2%
earnings
2.2 Amendments to paragraph 15.5 of the circular
The following amendments were made to paragraph 15.5 in order to confirm the
goodwill paid for Ilanga on acquisition:
"Goodwill was paid on the acquisition of Ilanga, being the excess price paid
above the underlying asset value identified and valued at the date of
acquisition, as set out in the table below.
The previous directors or Ilanga and Umlabu did not adopt the valuation of
mineral rights as set out in IFRS 6 (Mineral and mining companies), but the
directors of Yomhlaba, based on the valuation received from the independent
expert, have adopted IFRS 6 post the acquisitions. The result is a revaluation
reserve in the acquiring entities` accounts, which is set out in more detail in
the table below."
The heading of Column E of the table in paragraph 15.5 of the circular has been
amended by deleting the reference to "Revaluation Reserve" and the following two
additional note disclosures should be included at the bottom of the table:
"(2) The amount of R35.137 million represents goodwill arising on the
acquisition of Ilanga in terms of IFRS 3.
(3) The amount of R142.864 million represents the credit arising on the
acquisition of Umlabu in terms of IFRS 3."
2.3. Amendments to Appendix 8A of the circular
The information set out in Appendix 8A of the circular should be amended as set
out below.
2.3.1 The following line items in the pro forma balance sheet contained in
paragraph 2.1 should be amended as follows in order to comply with the
requirements of IFRS 3:
PRO FORMA BALANCE SHEET AS AT 31 DECEMBER 2006
COLUMN D COLUMN E
Consolidation YOMHLABA
adjustments GROUP
Pro forma
R`000 R`000
Retained income/(loss) 95,516 91,873
Revaluation reserve (290,061) -
2.3.2 The following two additional note disclosures should be made in paragraphs
2.2 and 3.2:
"Note (2) The amount of R35.137 million represents goodwill arising on the
acquisition of Ilanga in terms of IFRS 3.
Note (3) The amount of R142.864 million represents the credit arising on the
acquisition of Umlabu in terms of IFRS 3."
The note pertaining to Column D in paragraph 2.2 has been amended to read as
follows:
"Column D represents the pro forma consolidation adjustments, which account for
the contra of Yomhlaba`s investment in Ilanga and Umlabu and the discount
arising from the acquisition of Umlabu and the impairment of goodwill on the
acquisition of Ilanga. Set out in the table below are the details relating to
the purchase considerations for Ilanga and Umlabu."
2.3.3 The pro forma income statement contained in paragraph 3.1 has been amended
by the addition of "Discount arising on acquisition" and "Impairment of
goodwill" line items:
PRO FORMA INCOME STATEMENT FOR THE SIX MONTHS ENDED 31 DECEMBER 2006
COLUMN D COLUMN E
Pro forma YOMHLABA
Effects GROUP
Pro forma
R`000 R`000
Revenue - 46,264
Cost of Sales 19,390
Gross Profit (loss) - 26,874
Interest Received - 1,153
Other income - 18
Discount arising on - 142,864 142,864
acquisition
Impairment of goodwill (35,137) (35,137)
Restructurin of debt 30,762 30,762
g of debt
Less: Operating expenses 9,487 29,397
Administrative expenses - 14,674
Depreciation and amortisation - 5,173
Finance costs 5,517 5,580
Transaction 3,970 3,970
costs
Profit/(loss) before taxation 129,002 137,137
Taxation (2,995)
-
Profit/(loss) for the period 129,002 134,142
Reconciliation of earnings per
share to headline earnings per
share:
Earnings 129,002 134,142
Discount on acquisition, (138,489) (138,489)
impairment of goodwill and
restructuring of debt
Headline Earnings (9,487) (4,347)
2.3.4 The following amendment has been made to the earnings per share table in
paragraph 3.1, as a result of the abovementioned changes in the income
statement:
COLUMN E
YOMHLABA
GROUP
Pro forma
Earnings per share (cents) 33,5
2.3.5 The following amendments have been made to the introductory sentence and
the table below the pro forma income statement contained in paragraph 3.1:
"After the conversion of the NAMF and the Royal Bafokeng Capital shareholders`
loans (amounting to R36 million plus approximate interest of R1.2 million as
detailed in paragraph 2.1 and 3.2 respectively of the circular) at a conversion
price of not less than 60 cents per Yomhlaba share, the effect on earnings and
headline earnings per share will be as follows:"
After the conversion
of the shareholders`
loans
Number of shares in issue (`000) 462,000
Earnings per share (cents) 29,0
Headline earnings per share (cents) (0,9)
27 June 2007
Pretoria
Designated advisor
BDO QuestCo
Transaction sponsor
Metier
Restructuring advisor
Gandalf Trust
Transaction advisor
Radagast Capital (Pty) Ltd
Independent expert
Moores Rowland Corporate Finance (Pty) Limited
Reporting accountants and auditors
Compendium Pretoria Inc. Chartered Accountants (S.A.)
Registered Accountants and Auditors
Date: 27/06/2007 14:39:04 Produced by the JSE SENS Department.
