| Fri 28 Sep 2007, 15:25 | | ITG - Integrear - Acquisition Of The Assets Of Tan |
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ITG
ITG
ITG - Integrear - Acquisition Of The Assets Of Tangeni Feedlot (Pty) Ltd &
Businesses Of The Best Cut Group
INTEGREAR LIMITED
(Incorporated in the Republic if South Africa)
Registration number 1989/001319/06
Share Code: ITG & ISIN: ZAE00027231
("Integrear" or "the company")
ACQUISITION OF THE ASSETS OF TANGENI FEEDLOT (PTY) LTD & BUSINESSES OF THE BEST
CUT GROUP
Introduction
Integrear shareholders are referred to the announcements released on SENS on 20
April 2007 and 22 June 2007 detailing the intention of Integrear to purchase
the assets of Tangeni Feedlot (Pty) Ltd and the businesses of the Best Cut
Group for a total consideration of R79 201 524 plus value added tax of R5 600
000.
Subdivision of shares
In order to increase the number of shares available to implement the
acquisitions and specific issue, for future acquisitions and to enhance the
liquidity of its shares, Integrear proposes to subdivide its existing
authorised and issued share capital on a 7.16:1 basis. The net effect will be
to increase the authorized share capital from 50 000 000 shares of 1 cent each
to 358 160 750 shares of 0.1396 cent each and the issued share capital from 12
564 190 shares to 90 000 000.
Specific Issue
Integrear is in the process of finalizing the specific issue of shares for cash
to institutional investors and individual investors, in partial settlement of
the total purchase consideration.
Integrear intends to issue 50 000 000 new Integrear shares at an issue price of
100 cents per share, to raise an amount of R50 000 000.
Name change
In order to better reflect its new corporate identity Integrear will change its
name from Integrear Limited to Best Cut Holdings Limited.
Financial effects
The pro forma financial effects of the acquisitions and the specific issue on
the historical earnings and headline earnings, net asset value and net tangible
asset value per share are set out below. The financial effects have been
calculated utilising Integrear`s reviewed results for the year ended 30 June
2007, on the assumption that the acquisitions and specific issue occurred for
the purposes of the pro forma balance sheet occurred on 30 June 2007 and on 1
July 2006 for income statement purposes. The directors are responsible for the
preparation of the unaudited pro forma financial effects of Integrear. The pro
forma financial effects are provided for illustrative purposes only and because
of their nature may not give a fair presentation of the Group`s financial
position after the acquisitions and specific issue.
Per Before After Change After Best Change After Change
share transaction Tangeni % Cut Group % specific %
(c) acquisition acquisition issue
Earnings (1.02) (1.02) 0 7.22 807 4.64 (35.7)
Headline
Earnings (1.02) (1.02) 0 7.22 807 4.64 (35.7)
Net
Asset (0.77) (0.77) 0 (0.77) 0 30.77 4 096
Value
Net
Tangible (0.77) (0.77) 0 (0.77) 0 30.77 4 096
Asset
Value
Shares
in issue 90 000 90 000 90 000 90 000 90 000 140 000
(`000)
Notes
The "before transaction" column reflects the reviewed results of Integrear for
the year ended 30 June 2007, based on the subdivided number of shares, on the
assumption that the subdivision has been approved.
The "After Tangeni acquisition" column reflects the financial effects of the
acquisition of the Tangeni assets on the assumption that the acquisition was
effective 30 June 2007 for balance sheet purposes. The Tangeni acquisition has
no effect on the income statement as Integrear only acquired certain assets of
Tangeni.
The "After Best Cut Group acquisition" column reflects the financial effects of
the acquisition of the businesses of the Best Cut Group on the assumption that
the acquisition was effective 1 July 2006 for income statement purposes and 30
June 2007 for balance sheet purposes.
The "After specific issue" column reflects the financial effects of the
specific issue on the assumption that the specific issue was effective 1 July
2006 for income statement purposes and 30 June 2007 for balance sheet purposes.
The financial effects are reflected on a cumulative basis.
No provision has been made for interest payable on the loans incurred to
finance part of the purchase consideration, nor were any interest receivable
taken into account on the proceeds of the specific issue.
Profit Forecast
Forecast Forecast Forecast Forecast Forecast Forecast
9 months 9 months 9 months 12 12 12
ended ended ended months months months
June 2008 June June ended ended ended
2008 2008 June June June
2009 2009 2009
Tangeni Best Cut Group Tangeni Best Cut Group
Group (*) Group
R`000 R`000 R`000 R`000 R`000 R`000
Turnover 20,031 123,928 143,959 28,845 198,964 227,809
Gross 11,425 46,285 57,710 16,452 76,640 93,092
Profit
Operating 4,593 28,360 32,953 6,613 47,108 53,721
expenses
Profit before 6,832 17,925 24,757 9,839 29,532 39,371
interest and
finance charges
Finance costs (2,082) (1,739) (3,821) (2,776) (2,318) (5,094)
Net Profit 4,750 16,186 20,936 7,063 27,214 34,277
before Tax
Taxation 1,377 4,694 6,071 2,048 7,892 9,940
Net Profit 3,373 11,492 14,865 5,015 19,322 24,337
after Tax
Weighted average no of 140 000 000 140 000 000
ordinary shares in issue
Earnings per share (cents) 10.62(**) 17.38
Headline earnings per share (cents) 10.62 17.38
Notes
* The profit forecasts includes the acquisitions from 1 October 2007 and
therefore represents 9 months of trading
** Is 14.16 on an annualized basis
Main assumptions
General economic trading conditions will not deteriorate substantially.
The Group will not experience any material adverse change in its trading
conditions in any of its business divisions.
The Group will not be adversely affected by changes in legislation.
That Best Cut grows its revenue from the factory by 30% per annum over the next
two years based on expansion of depots in Gauteng, Lowveld and Eastern Cape.
That Best Cut grows its revenue from its four retail outlets by 20% per annum
over the next two years.
That Best Cut grows its revenue from its wholesale operation by 10% per annum
over the next two years.
That Best Cut grows its revenue from its Biltong factory by 50% per annum over
the next two years after implementing Hazard Analysis and Critical Control
Point System and taking up additional customers and possible relocation.
That Best Cut grows its revenue from the abattoir operation by processing the
total production from the Tangeni feedlot operation.
That the Tangeni feedlot operation be operated at full capacity versus the 60%
current capacity.
That the Group hedges 50% of the acquisition price with term loans from
institutional financiers.
Preliminary and issue expenses are not reflected in this forecast.
Documentation
A circular and revised listing particulars will be posted in the next week to
shareholders giving full detail of the transaction and the notice of the
General Meeting.
Centurion
28 September 2007
Sponsor
Exchange Sponsors (Pty) Limited
Date: 28/09/2007 15:25:54 Produced by the JSE SENS Department.
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