| Fri 6 Jun 2008, 11:23 | | WEA - WG Wearne Limited - Financial effects of the acquisition and withdrawal of |
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WEA
WEA
WEA - WG Wearne Limited - Financial effects of the acquisition and withdrawal of
the cautionary announcement
WG WEARNE LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1994/005983/06)
JSE code: WEA
ISIN: ZAE000078002
("WG Wearne" or "the Company")
FINANCIAL EFFECTS OF THE ACQUISITION OF PORTLAND HOLDINGS (PROPRIETARY) LIMITED
("PORTLAND HOLDINGS") BY WG WEARNE AND WITHDRAWAL OF THE CAUTIONARY ANNOUNCEMENT
INTRODUCTION
Shareholders are referred to the announcement, dated 19 May 2008, relating to
the agreements entered into by WG Wearne to acquire:
- the entire issued share capital and cession of claims in Portland
Holdings and its subsidiaries, as well as the minority interests
("minority shareholders") in certain subsidiaries, of Portland
Holdings (collectively "the Portland Group") in terms of the Portland
agreement for a purchase consideration of R122 615 660 ("the Portland
acquisition") from Portland Readymix Trust, Anco Besigheids Trust,
Willchrest Besigheids Trust ("the vendors"); and
- portion 8 of Farm 1098 Hooggekraal, as a going concern, in terms of
the Visserhok agreement from Visserhok Investments (Pty) Limited
("Visserhok") for a purchase consideration of R40 500 000 ("the
Visserhok acquisition").
- An additional amount which shall not exceed R60 000 000 will be paid
to the vendors for Portland Hollowcare Slabs (Pty) Limited ("Portland
Hollowcare Slabs"), a new company recently established, after the
profit after tax at 31 August 2010 has been finally agreed.
The Portland acquisition and the Visserhok acquisition are collectively defined
as "the transaction".
THE PURCHASE CONSIDERATION AND DISCHARGE THEREOF
1 Purchase consideration
Subject to the restrictions set out in the Portland agreement, the purchase
price payable by WG Wearne for the Portland acquisition is the aggregate
of:
1.1 R122 615 660 (in the event that the aggregate net profit after tax of
the Portland Group for the year ended 29 February 2008 ("the February
2008 PAT") is less than R20 218 000, then the purchase price shall be
reduced by an amount equal to the aggregate of the sum of R8.06 for
every R1.00 by which the February 2008 PAT is less than that amount)
in terms of the Portland acquisition; and
1.2 R40 500 000 in terms of the Visserhok acquisition; and
1.3 an amount equal to five times the average annual audited profit after
tax of Portland Hollowcore Slabs for the two 12 month periods ending
31 August 2009 and 31 August 2010 ("the Portland 2009/2010 PAT"), up
to a maximum payment of R60 000 000. Portland Hollowcore Slabs is a
new venture which is only expected to generate profit from May 2008.
2 Discharge of the purchase consideration
The purchase consideration will be discharged as follows:
2.1 R108 879 294 of the purchase price referred to in 1.1 will be
discharged on the effective date by the issue and allotment by WG
Wearne to the vendors of 31 108 370 WG Wearne ordinary shares at an
issue price of R3.50 per share;
2.2 R4 736 364.50 of the purchase price referred to in 1.1 will be
discharged on the effective date by the issue and allotment by WG
Wearne to the minority shareholders of 1 353 247 WG Wearne ordinary
shares at an issue price of R3.50 per share;
2.3 R9 000 001.50 of the purchase price referred to in 1.1 will be
discharged in terms of a call option as detailed in the Portland
agreement by the issue and allotment by WG Wearne to the minority
shareholders of 2 571 429 WG Wearne ordinary shares at an issue price
of R3.50 per share;
2.4 R40 500 000 of the purchase price referred to in 1.2 payable in cash
to Visserhok against registration of transfer of Portion 8 of Farm
1098 Hooggekraal into the name of WG Wearne;
2.5 The portion of the purchase price referred to in 1.3 will be
discharged on the third business day after the Portland 2009/2010 PAT
has been finally agreed by the auditors by the issue and allotment of
WG Wearne ordinary shares to the vendors at an issue price equal to
the greater of:
- R3.50 per WG Wearne ordinary share; or
- the 30 day volume weighted average price per WG Wearne ordinary
share at that date.
A maximum of 17 142 857 WG Wearne ordinary shares will be issued in this regard.
UNAUDITED PRO FORMA FINANCIAL EFFECTS OF THE TRANSACTION
The unaudited pro forma financial effects set out below are provided for
illustrative purposes only to assist the shareholders of WG Wearne to assess the
impact of the transaction on the earnings per share ("EPS"), headline earnings
per share ("HEPS"), net asset value per share ("NAVPS") and net tangible asset
value per share ("NTAVPS") of WG Wearne. These unaudited pro forma financial
effects have been disclosed in terms of the JSE Listings Requirements and
because of their nature may not give a fair presentation of WG Wearne`s results
and financial position after the transaction. The unaudited pro forma financial
effects are the responsibility of the directors of WG Wearne and are presented
in a manner consistent with the accounting policies adopted by WG Wearne.
Before After Change
EPS (cents) 27.5 31.4 14.2%
HEPS (cents) 26.9 31.1 15.6%
NAVPS(cents) 119.4 161.5 35.3%
NTAVPS (cents) 114.9 101.3 (11.8%)
Weighted average number 145 484 180 517 24.1%
of shares in issue (000)
Shares in issue at 150 000 185 033 23.4%
period end (000)
Notes:
1 The EPS, HEPS, NAVPS and NTAVPS, as set out in the "Before" column of the
table, have been extracted from WG Wearne`s reviewed results for the year
ended 29 February 2008 as released on SENS on 21 May 2008.
2 EPS and HEPS effects are based on the following assumptions and
information:
- the transaction was effective 1 March 2007;
- the purchase price of R163 115 660 was paid on 1 March 2007 by way of
an issue of 35 033 046 WG Wearne ordinary shares at R3.50 per share
(i.e. R122 615 660) in respect of the Portland acquisition and a cash
payment of R40,5 million in respect of the Visserhok agreement, which
cash payment was financed through borrowings of R40,5 million
incurring interest at 14% per annum (pre tax);
- the final payment of R60 million is subject to profit warranties; and
- the total after tax profit attributable to the transaction is R20,821
million for the year ended 29 February 2008 based on the unaudited pro
forma financial statements for the year then ended.
3. NAVPS and TNAVPS effects are based on the following assumptions and
information:
- the transaction was effective 29 February 2008;
- the purchase price of R163 115 660 was paid on 29 February 2008 in the
manner described in note 2 above;
- estimated transaction costs of R2,9 million have been accounted for
against share premium; and
- the revaluations and allocations that may arise from the application
of IFRS 3 (Business Combinations) have not been made as this will only
be finalised in due course. The pro forma financial information has
thus been prepared on the basis that the excess of the purchase price
over the net asset value of the transaction will comprise goodwill of
R104.6 million, which goodwill is not amortised.
WITHDRAWAL OF THE CAUTIONARY ANNOUNCEMENT
Pursuant to the release of the financial effects of the transaction, the
cautionary announcement is hereby withdrawn. Shareholders will be notified once
the transaction becomes unconditional.
6 June 2008
Corporate and Designated Adviser
Vunani Corporate Finance
Auditors
RSM Betty & Dickson (Johannesburg)
Date: 06/06/2008 11:23:01 Produced by the JSE SENS Department.
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