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BSR
BSR
BSR - Basil Read Holdings - Financial Effects For The Acquisition Of The
Gerolemou / Mvela Group and Withdrawal Of Cautionary Announcement
BASIL READ HOLDINGS LIMITED
(Incorporated in the Republic of South Africa)
Registration number 1984/007758/06
Share Code: BSR ISIN: ZAE000029781
("Basil Read" or the "company")
- FINANCIAL EFFECTS FOR THE ACQUISITION OF THE GEROLEMOU / MVELA GROUP
- WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT
1. Introduction
Shareholders are referred to the announcement released on SENS on 10 June 2009
and published in the press on 11 June 2009 wherein it was announced that Basil
Read, through its wholly owned subsidiary Basil Read (Proprietary) Limited, has
reached agreement with the shareholders of Mvela Phanda Construction
(Proprietary) Limited, Contract Plumbing and Sanitation (Proprietary) Limited
and P. Gerolemou Construction (Proprietary) Limited ("the Gerolemou / Mvela
group"), to acquire all the shares in and claims of the Group for a fair value
consideration of R345,5 million.
2. Financial effects
Unaudited pro forma financial information
The unaudited pro forma consolidated income statement and balance sheet position
of Basil Read after the proposed transaction is set out below. The unaudited pro
forma income statement and balance sheet have been presented for illustrative
purposes only and because of their nature, may not give a fair reflection of
Basil Read` results, financial position and changes in equity after the
transaction. It has been assumed for purposes of the pro forma financial
information that the transaction took place with effect from 1 January 2008 for
income statement purposes and 31 December 2008 for balance sheet purposes. The
directors of Basil Read are responsible for the preparation of the unaudited pro
forma income statement and balance sheet.
Unaudited pro forma consolidated income statement.
Before 1 Gerolemou Adjustment Adjustment - Unaudited
transaction / Mvela - finance amortisation Pro-forma`s
group 2 cost 3 of after
intangible 3 transaction
4
Revenue
3,474,831 913,695 - - 4,388,526
Contracting and
other costs (2,939,421) (777,438) - (8,123) (3,724,982)
Gross profit
535,410 136,257 - (8,123) 663,544
Other admin and
operating (227,020) (65,696) - - (292,716)
overheads
Operating profit
308,390 70,561 - (8,123) 370,828
Net finance
(costs) / income (12,314) 8,403 (34,820) - (38,731)
Profit before
share of profit 296,076 78,964 (34,820) (8,123) 332,097
from associates
Share of profits 85
from associates - - - 85
Profit before
taxation 296,161 78,964 (34,820) (8,123) 332,182
Taxation
(90,319) (23,123) 6,787 2,274 (104,381)
Net profit for
the year 205,842 55,841 (28,033) (5,849) 227,801
Net profit for
the year
attributable to
the following:
Equity
shareholders of 204,516 55,621 (28,033) (5,849) 226,255
the company
Minority
interests 1,326 220 - - 1,546
Net profit for
the year 205,842 55,841 (28,033) (5,849) 227,801
Earnings per
share (cents) 265.44 72.19 (36.38) (7.59) 293.65
Diluted earnings
per share 262.12 71.29 (35.93) (7.50) 289.98
(cents)
Headline
earnings per 267.04 73.89 (36.38) (7.59) 296.96
share (cents)
Weighted average
number of shares 77,049 77,049 77,049 77,049 77,049
in issue (000)
Unaudited pro forma consolidated balance sheet.
Before 1 Gerolemou Other Unaudited
transaction / Mvela adjust- Pro-forma`s
group 2 ments 3 after
transaction
4
ASSETS
Non-current
assets 960,792 60,227 267,875 1,288,894
Property, plant
and equipment 761,470 42,155 - 803,625
Intangible
assets 143,907 - 267,875 411,782
(including
Goodwill)
Other non-
current assets 55,415 18,072 - 73,487
Current assets
1,515,927 527,790 (2,720) 2,040,997
Contract and
trade debtors 448,967 209,448 - 658,415
Cash and cash
equivalents 943,757 279,939 (2,720) 1,220,976
Other current
assets 123,203 38,403 - 161,606
TOTAL ASSETS
2,476,719 588,017 265,155 3,329,891
EQUITY AND
LIABILITIES
Capital and
reserves 792,073 85,773 (84,865) 792,981
Non-current
liabilities 348,150 11,084 194,602 553,836
Interest-bearing
borrowings 303,060 10,208 189,661 502,929
Other non-
current 45,090 876 4,941 50,907
liabilities
Current
liabilities 1,336,496 491,160 155,418 1,983,074
Trade and other
payables 1,024,800 447,412 - 1,472,212
Current portion
of interest- 155,646 25,310 155,418 336,374
bearing
borrowings
Other current
liabilities 156,050 18,438 - 174,488
TOTAL EQUITY AND
LIABILITIES 2,476,719 588,017 265,155 3,329,891
Net Asset Value
("NAV") 792,073 792,981
Tangible Net
Asset Value 648,166 381,199
("TNAV")
Total number of
shares in `000s 86,472 86,472
NAV/share
(cents) 915.99 917.04
TNAV/share
(cents) 749.57 440.83
Notes and Assumptions:
1. Extracted from Basil Read`s published, audited consolidated financial
statements for the year ended 31 December 2008.
2. Extracted from the historical financial information of the Gerolemou /
Mvela group for the year ended 28 February 2009.
3. Adjustments reflect the following:
Income Statement:
- Finance costs on the interest bearing borrowings raised to fund the
transaction at an assumed interest rate of 10% per annum and taxation
thereon at 28%;
- Notional finance cost on the deferred purchase consideration at an
assumed interest rate of 10% per annum;
- Amortisation of R0.2 million for debt issue cost, over the term of the
associated interest bearing borrowings, and taxation thereon at 28%;
- Amortisation of R8.1 million on the assumed intangible asset, based on a
provisional purchase price allocation exercise, over the life of the
related contracts, and taxation thereon at 28%; and
Balance sheet:
- The purchase consideration is a maximum amount of R360 million, including
imputed interest, assuming profit warranties are achieved, and is assumed to be
settled as follows:
- R240 million on the effective date for accounting purposes, expected to
be on or about 1 September 2009; and
- R30 million payable on each of, 1 July 2010 and 1 July 2011
- R30 million payable on each of, 1 July 2010 and 1 July 2011 if the
Gerolemou / Mvela group achieve an after-tax profit, on work secured at 1
March 2009, of R122 million;
- R240 million is accounted for as interest bearing borrowings on the
effective date, with the balance being accounted for as a deferred
purchase consideration, discounted to present value at an assumed rate of
10% per annum on the expected accounting effective date, on or about 1
September 2009;
- Intangible assets, including Goodwill, arising on the transaction are
assumed to amount to R267.9 million, with Goodwill amounting to R250.2
million and contract based intangibles amounting to R17.6 million, and a
related deferred tax liability on the intangible assets amounting to R4.9
million;
- Debt issue costs associated with the interest bearing borrowings of an
estimated R0.7 million have been capitalised as part of the interest
bearing borrowings;
- Transaction costs of an estimated R2 million have been capitalised as
part of the purchase consideration; and
4. Unaudited consolidated pro-forma financial information after the
transaction.
5. The pro forma financial information has been prepared in accordance with
IFRS and in terms of The Guide on Pro Forma Financial Information issued
by The South African Institute of Chartered Accountants, in line with the
JSE Listings Requirements.
3. Conditions precedent
The acquisitions are subject to conditions that are considered normal for
transactions of this nature, of which the following remain outstanding:
- the completion of a formal financial and legal due diligence investigation
of the vendors;
- the requisite regulatory compliance and approval to the extent necessary,
including Competition Authority and the JSE Limited;
- approval by the requisite number of Basil Read shareholders in general
meeting; and
- to the extent required in terms of the Gerolemou / Mvela group`s existing
contracts and/or agreements relating to their joint ventures, the counterparties
to the existing contracts consent in writing to the change in control of the
Gerolemou / Mvela group.
4. Further documentation and withdrawal of cautionary announcement.
A circular to shareholders containing the requisite information pertaining to
the transaction and convening a meeting of shareholders will be posted to
shareholders in due course.
Having regard to the information disclosed above, shareholders are advised that
they no longer need to exercise caution when dealing in the company`s
securities.
Johannesburg
09 July 2009
Sponsor: Sasfin Capital
(A division of Sasfin Bank Limited)
Date: 09/07/2009 16:54:35 Produced by the JSE SENS Department.
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