| Fri 25 Apr 2008, 12:10 | | JSC - Jasco - Pro forma financial effects and with |
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JSC
JSC
JSC - Jasco - Pro forma financial effects and withdrawal of cautionary
JASCO ELECTRONICS HOLDINGS LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1987/003293/06)
Share code: JSC ISIN: ZAE000003794
("Jasco" or "the company")
PRO FORMA FINANCIAL EFFECTS AND WITHDRAWAL OF CAUTIONARY
1. BACKGROUND
1.1 Shareholders are referred to the detailed announcement released on SENS on
3 April 2008 and published in the press on 4 April 2008 ("the announcement")
concerning, inter alia:
1.1.1 that an agreement had been concluded in terms of which Iningi
Investments 180 (Pty) Limited ("Iningi"), a wholly-owned subsidiary of Jasco,
would acquire from Malesela Holdings No. 1 (Pty) Limited ("Malesela"), a
wholly-owned subsidiary of Community Investment Holdings (Pty) Limited
("CIH"), a 34% economic interest in Malesela Taihan Electric Cable (Pty)
Limited ("M-Tec"), subject to certain suspensive conditions ("the M-Tec
acquisition");
1.1.2 the creation and issue by Iningi of 40 000 fully paid-up cumulative
redeemable Iningi preference shares ("the Iningi preference shares") to
AfroCentric Investment Corporation Limited ("AfroCentric") at an issue price of
R2 500 per Iningi preference share as part of the consideration payable for the
M-Tec acquisition ("the Iningi preference share issue");
1.1.3 the acquisition by AfroCentric of a 34,9% interest in Jasco from CIH
("the AfroCentric investment"); and
1.1.4 various related corporate actions that the company proposes,
(collectively, "the transactions").
1.2 Shareholders are also referred to the trading update released o n SENS by
the company on 31 March 2008 wherein shareholders were reminded of the
anticipated redemption of Jasco preference shares in terms of the company`s BEE
transaction with CIH in 2003. At the time, the purchase consideration for
Tasslelane Investments (Pty) Limited was settled through the issue of both
ordinary and preference shares. 29 884 633 redeemable preference shares were
issued to CIH, which are eligible for redemption subsequent to the finalisation
of the 29 February 2008 annual audit. Following on from the redemption, Jasco
ordinary shares will be issued to CIH based on a predetermined profit formula
in line with Jasco`s earnings performance for the five years ended 29 February
2008 ("the Jasco preference share redemption").
1.3 At the time of the announcement on 3 April 2008, the unaudited pro forma
financial effects on Jasco of the proposed transactions were not available.
Shareholders were therefore advised (in paragraph 6 of the announcement), to
continue to exercise caution until such time that the unaudited pro forma
financial effects were made available. In this regard, Jasco shareholders are
advised of the unaudited pro forma financial effects of the Jasco preference
share redemption and proposed transactions, as set out in paragraph 2 below:
2. PRO FORMA FINANCIAL EFFECTS
2.1 Set out below are the unaudited pro forma financial effects on Jasco and
its subsidiaries, before and after the Jasco preference share redemption and
the proposed transactions. The pro forma financial effects are the
responsibility of the company`s directors and have been prepared for
illustrative purposes to show how the transactions may have affected Jasco`s
results for the six-month period ended 31 August 2007, based on the
assumptions that:
- for the purpose of calculating earnings per share (basic and diluted) and
headline earnings per share (basic and diluted), the M-Tec acquisition and
Iningi preference share issue were effected on 1 March 2007; and
- for the purpose of calculating net asset value and net tangible asset value
per ordinary share, the M-Tec acquisition and Iningi preference share issue
were effected on 31 August 2007.
2.2 As mentioned in paragraph 1.2 above, the Jasco preference share redemption
is expected to occur within the first two weeks of May 2008, but in any event
prior to the implementation of the proposed transactions. As the Jasco
preference share redemption is an independent action that will take place
irrespective of the decision of shareholders in relation to the proposed
transactions, management deems it more meaningful to shareholders to adjust the
"Before" comparator to reflect the redemption of the preference shares and the
resultant issue of new Jasco ordinary s hares as if it happened on 31 August
2007 for balance sheet purposes and with effect from 1 March 2007 for income
statement purposes.
2.3 It should be noted that the unaudited pro forma financial effects have
been prepared on Jasco`s latest six-month results and that Jasco`s
performance, when measured on an annual basis, has historically been affected
by seasonality factors, which favour substantially stronger performance in the
second half of Jasco`s financial year.
2.4 It should further be noted that M-Tec has undergone a detailed independent
due diligence. The due diligence indicated that M-Tec`s business is also
affected by similar seasonal trends (as those experienced by Jasco) and that
the results of M-Tec on an annual basis should have no dilutionary effect on
the expected future earnings and headline earnings of Jasco, as the share of
the associated earnings from M-Tec should offset any potential dilution that
may result from the allocation of additional Jasco ordinary shares.
Hence, taking the above factors into consideration and because of their nature,
the pro forma financial effects may not fairly reflect Jasco`s financial
performance and position after the transactions.
After
the M-Tec
acquisition
and the
Iningi
preference
Before Before share
Published(1) Adjusted(2) issue(3)
(cents) (cents) (cents)
Earnings per share ("EPS") 16,9 13,5 13,7
Headline earnings per share ("HEPS") 16,9 13,5 13,7
Diluted earnings per share 11,4 13,0 13,3
Diluted headline earnings per share 11,4 13,0 13,3
Net asset value per share 186,8 149,6 192,1
Net tangible asset value per share 120,6 96,7 152,0
Weighted average number of shares
in issue(4) 68 539 320 85 702 289 113 117 674
Potential maximum number
of shares in issue for dilution
purposes(2)(5)(6) 101 773 253 89 051 559 116 466 944
Change Change
Pro forma Pro forma
(cents) (%)
Earnings per share ("EPS") 0,2 1,2
Headline earnings per share ("HEPS") 0,2 1,2
Diluted earnings per share 0,3 2,1
Diluted headline earnings per share 0,3 2,1
Net asset value per share 42,5 22,1
Net tangible asset value per share 55,3 36,4
Weighted average number of shares in issue(4) 27 415 385 40,0
Potential maximum number of shares in issue
for dilution purposes(2)(5)(6) 27 415 385 40,0
Notes:
1. The "Before Published" financial information has been extracted, without
adjustment, from Jasco`s published interim results for the six-month period
ended 31 August 2007.
2. The "Before Adjusted" column reflects the adjustment to the weighted
average number of Jasco ordinary shares in issue and the potential maxi mum
number of Jasco ordinary shares in issue for dilution purposes, and reflects
management`s current estimate of the number of ordinary shares to be issued to
CIH in terms of the Jasco preference share redemption, namely 17 162 969 Jasco
ordinary shares, which is approximately 57% of the previously published fully
diluted assumption of 29 884 663 ordinary shares. The Jasco preference shares
are due to be redeemed after 29 February 2008 and a requisite number of new
Jasco ordinary shares, based on previously agreed Jasco profit targets for the
five-year period ended 29 February 2008, will be issued to CIH after the
finalisation of Jasco`s audited results for the financial year ended 29
February 2008, which is expected to occur within the first two weeks of May
2008, but in any event prior to the implementation of the proposed
transactions.
3. Included in the "After" column are the adjustments to reflect the effect of
bringing in 34% of M-Tec`s after-tax profit attributable to Jasco, namely
R10,5 million, which is based on M-Tec`s reviewed interim results for the six-
month period ended 31 December 2007, as well as the preference dividend payable
for six months of R5,8 million arising from the Iningi preference share issue
and a once-off after-tax effect of interest forfeited of R0,8 million on the
R25 million payable in cash as part of the total consideration due in terms of
the M-Tec acquisition. The preference dividend of R5,8 million is based on a
principal amount of R100 million multiplied by 80% of the prime rate of 14,5%
for a six-month period, and is inclusive of a 10% withholding tax (R0,6
million) that will be payable by AfroCentric in the post STC environment.
Jasco`s total cost will thus not exceed 80% of the ruling prime interest rate.
4. The calculation of basic EPS and HEPS, before the proposed transactions, is
based on 85,7 million weighted average number of ordinary shares in issue after
deducting 1,4 million treasury shares. The calculation of basic EPS and HEPS,
after the proposed transaction is based on 113,7 million weighted number of
Jasco ordinary shares in issue and incorporates the proposed issue of 27 415
385 ordinary shares as part payment of the M-Tec purchase consideration.
5. The calculation of diluted EPS and HEPS in the "Before Adjusted" column is
based on 89,1 million weighted average number of Jasco ordinary shares in issue
which incorporate the dilutionary effect of the share options awarded to Mr M H
Lotz (a director of Jasco) of 3,3 million ordinary shares (as announced in May
2007).
6. The calculation of diluted EPS and HEPS in the "After" column is based on
116,5 million weighted average number of Jasco ordinary shares in issue which
incorporates the proposed issue of 27 415 385 ordinary shares as part payment
of the M-Tec purchase consideration.
3. WITHDRAWAL OF CAUTIONARY
Jasco shareholders are referred to the cautionary announcement dated 5 November
2007 and its renewals on 10 December 2007, 21 January 2008, 3 March 2008 and 3
April 2008 and are advised that the unaudited pro forma financial effects on
Jasco of the proposed transactions have been made available in this
announcement and consequently caution is no longer required to be exercised by
shareholders when dealing in their Jasco ordinary shares.
4. FURTHER DOCUMENTATION
A circular to shareholders, including revised listing particulars, will be
issued in due course containing details of the proposed transactions, together
with a notice convening a general meeting of Jasco shareholders.
Johannesburg
25 April 2008
Corporate adviser and sponsor
PSG CAPITAL
Independent adviser
PKF
Corporate Finance
Reporting accountants
ERNST & YOUNG
Chartered Accountants (SA)
(Registered Accountants and Auditors)
Legal advisers
ROSSOUWS
Attorneys/Prokureurs
Corporate adviser to CIH/Malesela
Rothbart Inc.
Legal advisers to CIH/Malesela
SINERGI
Date: 25/04/2008 12:10:01 Produced by the JSE SENS Department.
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