| Mon 18 Feb 2008, 16:37 | | BIK - Brikor - Acquisition Of The Zululand Quarries Group And Withdrawal |
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BIK
BIK
BIK - Brikor - Acquisition Of The Zululand Quarries Group And Withdrawal
Of Cautionary Announcement
Brikor Limited
(Incorporated in the Republic of South Africa)
(Registration number 1998/013247/06)
(JSE code: BIK & ISIN: ZAE000101945)
("Brikor" or "the company")
ACQUISITION OF THE ZULULAND QUARRIES GROUP AND WITHDRAWAL OF CAUTIONARY
ANNOUNCEMENT
1. INTRODUCTION
1.1 Shareholders are advised that, further to the cautionary announcement
dated 20 November 2007 and the renewal thereof dated 7 January 2008,
Brikor has entered into an agreement with Mr JB Habig ("Habig") on
14 February 2008 for the acquisition by Brikor of 100% of the ordinary
shares in, and all shareholders claims against, the Zululand Quarries
Group of Companies, comprising of the companies set out in paragraph
1.2. below (the "Zululand Quarries Group") from Habig, for an
aggregate purchase consideration of R102 000 000 ("the Zululand
Quarries transaction") with effect from 29 February 2008 ("the
effective date").
1.2 The Zululand Quarries Group comprises of the following companies:
1.2.1 Zululand Quarries (Pty) Limited;
1.2.2 Hanis Investments (Pty) Limited;
1.2.3 Impala Construction Supplies (Pty) Limited;
1.2.4 Tugela Ready Mix (Pty) Limited;
1.2.5 Stanger Brick and Tile (Pty) Limited
1.2.6 Stanbrik Roof Tiles (Pty) Limited; and
1.2.7 Natal Sand Supplies (Pty) Limited.
2. Background to the Zululand Quarries Group
2.1 The business conducted by the Zululand Quarries Group is strategically
situated on the North Coast of KwaZulu-Natal, approximately 100
kilometers north of Durban.
2.2 The Zululand Quarries Group:
- manufactures concrete masonry products, including bricks, blocks
and pavers;
- manufactures and supplies concrete roof tiles;
- conducts an aggregate and ready-mixed concrete manufacture and
supply business;
- owns a quarry situated on approximately 69 hectares of land from
which it mines sand for supply to companies within the Zululand
Quarries Group and outside customers;
- is involved in the supply of construction materials and services;
and
- employs approximately 200 people.
3. Terms of the Zululand Quarries transaction
3.1 The purchase consideration payable for the acquisition of the Zululand
Quarries Group is the sum of R102 000 000, which purchase
consideration will be paid in cash to Habig.
3.2 Habig has entered into a consultancy agreement and a confidentiality
and restraint agreement with Brikor.
4. Rationale for the acquisition
The rationale for the Zululand Quarries transaction is, inter alia, as
follows:
- the acquisition of the Zululand Quarries Group is in line with
Brikor`s growth strategy as well as its geographical expansion plan to
have a national footprint and will be Brikor`s first entry into the
coastal regions;
- the product range offered by the Zululand Quarries Group falls within
the diversification strategy of Brikor and also strengthens the
current Brikor product offering such as roof tiles, pavers and clay
bricks and pipes; and
- the location offers Brikor a strategic entrance and opportunity to
offer clay bricks to the KwaZulu-Natal market.
5. Conditions precedent to which the Zululand Quarries transaction is
subject
5.1 The Zululand Quarries transaction is subject, inter alia, to the
following conditions precedent:
- the satisfactory outcome of a due diligence investigation;
- that the net working capital of the Zululand Quarries Group at the
effective date is not less than R12 223 798;
- that the aggregate liabilities of the Zululand Quarries Group at the
effective date does not exceed the sum of R5 770 000;
- that the profit before taxation for the 12 months ending on the
effective date is an amount of not less than R18 700 000;
- that the unconditional written consent is obtained from other parties
to -the Material Contracts and Licences and from the relevant
authorities to ensure that the Material Contracts and Licences shall
remain of full force and effect; and
- such other regulatory approvals as may be required.
5.2 Brikor received unconditional approval from the Competition Commission
authorities on 13 February 2008 in regard to the implementation of the
Zululand Quarries transaction.
6. Unaudited pro forma financial effects of the transaction
6.1 The unaudited pro forma financial effects set out below are provided
for illustrative purposes only to provide information about how the
Zululand Quarries transaction may have impacted on Brikor`s results and
financial position. Due to the nature of the unaudited pro forma financial
information, it may not give a fair presentation of the group`s results and
financial position after the acquisition of Zululand Quarries. The
unaudited pro forma financial effects are based on the reviewed interim
financial information of Brikor at 31 August 2007. The directors of Brikor
are responsible for the preparation of the unaudited pro forma financial
effects.
Reviewed Unaudited % Change
Before Zululand Pro forma
Quarries After the
transaction Zululand
Brikor 6 months Quarries
31 August 2007 transaction
6 months
31 August
2007
Earnings per 8.7 9.4 7.7
share (cents)
Headline earnings 7.4 8.1 9.0
per share (cents)
Net asset value 62.5 62.5 -
per share (cents)
Net tangible 58.3 45.8 (21.4)
asset value per
share (cents)
Weighted average 502 136 986 502 136 986 n/a
shares in issue
Shares in issue 636 000 000 636 000 000 n/a
at period end
Notes:
(1) The unaudited pro forma financial effects on the results were prepared
on the basis that the acquisition of the Zululand Quarries Group was
completed on 1 March 2007.
(2) The "Before the Zululand Quarries transaction" column has been
extracted without adjustment, from the reviewed results of Brikor for
the 6 months ended 31 August 2007.
(3) The Zululand Quarries Group figures were extracted from the financial
statements of the companies as set out below at that date. The
financial statements of the Zululand Quarries Group cover a twelve
month period and were adjusted to reflect a 6 month period. These
financial statements were prepared in accordance with generally
accepted accounting practice in South Africa and were audited by
Stuart Edwards and Company who issued an unqualified audit opinion.
The entities in paragraph (3)(c) and (3)(d) below operated as Closed
Corporations and the Accounting officer`s duties were performed by
Stuart Edwards and Company. These entities were subsequently
converted to companies.
(a) Zululand Quarries (Pty) Limited at 31 August 2007;
(b) Hanis Investments (Pty) Limited at 28 February 2007;
(c) Impala Construction Supplies (Pty) Limited at 28 February 2007;
(d) Tugela Ready Mix (Pty) Limited at 28 February 2007;
(e) Stanger Brick and Tile (Pty) Limited at 31 August 2007; and
(f) Stanbrik Roof Tiles (Pty) Limited and Natal Sand Supplies (Pty)
Limited are newly formed entities with no historical financial
information.
(4) The "After the Zululand Quarries transaction" earnings per share and
headline earnings per share have been adjusted to include the loss in
interest due to the cash payment to Habig at 10 percent per annum;
(5) The "After Zululand Quarries transaction" net asset value and net
tangible asset value per share have been adjusted to include the
following:
- the cash from internal resources to fund the acquisition;
- the assets and liabilities of the Zululand Quarries Group; and
- the net tangible asset value per share excludes goodwill.
(6) The fully diluted earnings and headline earnings per share have not
been disclosed as it is similar to the earnings and headline earnings
per share disclosed above.
(7) The allocation of the purchase price in terms of IFRS 3: (AC 140);
Business Combinations has not as yet been calculated as this is done
at year end. The pro forma financial information has been prepared on
the basis that the excess of the purchase price over the net asset
value of the acquisition will comprise of goodwill in the sum of R79
million.
7. Withdrawal of cautionary announcement
Caution is no longer required to be exercised by shareholders when
dealing in their securities. Shareholders will be notified once the
transaction becomes unconditional.
Designated Adviser
Exchange Sponsors (Pty) Limited
Auditors and Reporting Accountants
RSM Betty & Dickson (Tshwane)
Attorneys
Fuxmans Inc.
Johannesburg
18 February 2008
Date: 18/02/2008 16:37:01 Produced by the JSE SENS Department.
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