| Wed 15 Aug 2007, 15:26 | | FPF - Finbond - Acquisition Of The Excel Group (Pr |
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FPF
FPF
FPF - Finbond - Acquisition Of The Excel Group (Proprietary) Limited
Finbond Property Finance Limited
(Previously Quantum Leap Investments 527 (Proprietary) Limited)
(Incorporated in the Republic of South Africa)
(Registration number: 2001/015761/06)
Share code: FPF & ISIN: ZAE000097259
("Finbond" or "the Company")
ACQUISITION OF THE EXCEL GROUP (PROPRIETARY) LIMITED
1. Introduction
Finbond shareholders are referred to the cautionary announcement issued by
the Company on 16 July 2007 and are advised that Finbond has concluded an
agreement to acquire the shares in and claims against The Excel Group
(Proprietary) Limited ("the Excel Group") ("the Acquisition"). As its sole
asset the Excel Group owns 50% of the issued share capital in and claims
against BondExcel (Proprietary) Limited ("BondExcel") and has effective
management control of BondExcel.
2. About BondExcel
BondExcel was founded by Mr. Jack Trevena (formerly the managing director
of Nedbank`s home loans division) and partners in 2003. In January 2005,
Bond Excel entered into a joint venture with Bond Choice (Proprietary)
Limited. BondExcel is a mortgage origination business founded on a model
of both independent business units operating for their own account and with
its own processing centre. Bond Excel ensures that their independent
business units conform to common standards and set practices. BondExcel
operates nationwide and currently has 85 associates and sub-license holders
and 17 branded associate offices representing it nationally. BondExcel has
grown its average monthly volumes from R40 million per month of mortgages
at inception to current monthly origination volumes of between R600 million
and R850 million.
3. Rationale for the Acquisition
The Acquisition of The Excel Group is aimed at adding significantly to
Finbond`s existing monthly mortgage origination volumes and further
enhancing its existing distribution network. This Acquisition will
establish Finbond as the 4th largest mortgage originator in South Africa
with annual origination volumes of approximately R19 billion. The
acquisition also serves to further entrench and strengthen the strategic
relationship between Finbond and Bond Choice.
4. Details of the Acquisition
Finbond has acquired the Excel Group for a total consideration of R53 534
000 ("the consideration"). The consideration will be settled by a cash
payment of R26 767 000 and the balance will be settled by the issue of 11
896 445 Finbond shares at an issue price of 225 cents per share after the
Excel Group has produced accounts for the year ending 29 February 2008.
The sellers of the Excel Group have warranted that the Excel Group will
produce a net profit after tax ("the warranted profit") of R10 295 000 for
the year ending 29 February 2008. For every R1 that the actual net profit
after tax differs from the warranted profit, the consideration will be
adjusted by R5,20 and the number of shares to be issued increased or
decreased accordingly.
The vendors are the current executive management of BondExcel: Jack
Trevena, Gary de Souza and Geoffrey Els ("the executive management") who
will continue to manage BondExcel following the Acquisition. The
Acquisition is effective 1 March 2007 subject to the fulfilment of the
following conditions:
* the conclusion of a successful due diligence
investigation on The Excel Group; and
* the conclusion of service agreements with the executive
management of The Excel Group.
5. Financial effects
Set out below are the pro forma financial effects of the Acquisition on the
pro forma financial information as set out in the Finbond prospectus
published by the Company on 30 May 2007. The pro forma financial effects
have been prepared for illustrative purposes only, to provide information
on how the Acquisition would have affected the previously published pro
forma financial information. Because of their nature, they may not give a
fair reflection of Finbond`s financial position after the Acquisition. The
pro forma financial effects are the responsibility of the directors of
Finbond.
Pro forma
before the Pro forma
Acquisiton after the
(cents) Acqusition Change
(cents)
Earnings and headline 9,9 12,9 30,3%
earnings per share
Diluted earnings and 7,8 9,7 25,2%
headline earnings per
share
Net asset value per 59,6 59,6 -
share
Tangible net asset value 37,4 28,0 (25,3%)
per share
Notes and assumptions:
1. The amounts set out in the "Pro forma before the Acquisition" column
have been extracted from the pro forma financial information included
in the prospectus published by the Company on 30 May 2007
2. The adjustments have been based on the audited financial statements of
Bond Excel prepared for the year ended 31 December 2006
3. It has been assumed that the cash element of the purchase
consideration will be funded from available cash that the company
currently has on deposit. As no interest income on this money was
taken into account in the pro forma financial information included in
the prospectus, no further adjustment has been made.
4. The dilution in earnings and headline earnings per share is due to the
profit warranty shares to be issued by 11 896 445 to the vendors
following the achievement of warranted profits.
6. Renewal of cautionary
Finbond shareholders are advised that the Company continues to be involved
in negotiations regarding another potential acquisition. The potential
acquisition, if successfully concluded, could have a material effect on the
price of Finbond`s shares. Shareholders are therefore advised to exercise
caution in dealing with the shares of Finbond until such time that a
further announcement is made.
Pretoria
15 August 2007
DESIGNATED ADVISER:
EXCHANGE SPONSORS (PTY) LIMITED
Date: 15/08/2007 15:26:18 Produced by the JSE SENS Department.
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