| Wed 14 Apr 2010, 12:11 | | GRF - Group Five Limited - Voluntary market update |
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GRF
GRF
GRF - Group Five Limited - Voluntary market update
GROUP FIVE LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1969/000032/06)
Share code: GRF ISIN: ZAE 000027405
("Group Five" or "the group" or "the company")
Voluntary market update
Group Five wishes to update shareholders on further progress with respect to
its BEE transaction with its 9.2% BEE shareholder, iLima Consortium
(Proprietary) Limited ("iLima") ("the BEE transaction")
Group Five announced in June 2009 that the BEE transaction would "unwind" and
that this would entail the return of the shares held by iLima to the company.
In line with this, Group Five made application to the Johannesburg High Court
in September 2009 for an order compelling the return of these shares.
The judgment handed down by the Johannesburg High Court, found in favour of
Group Five.
The result of the judgment is that the 11,015,959 Group Five shares currently
held by iLima will be returned to Group Five and cancelled.
The accounting effect of this judgment is as follows:
- the capital of the group will reduce once the shares are returned and
cancelled;
- the fully diluted weighted average number of shares will decrease. As
previously reported, the return of the 11,015,959 Group Five shares will
have the effect of reducing the reported H1 F2010 fully diluted weighted
average number of shares from 105,5 million shares to 101,2 million
shares; and
- no income statement impairment. As previously reported, the group
entered into an Enterprise Development Agreement ("EDA") with iLima
Projects (Proprietary) Limited ("iLima Projects"). In terms of the EDA,
Group Five periodically advanced technical and administrative guidance
and provided bond and guarantee support and working capital loans to
iLima in relation to construction projects undertaken by iLima Projects
up until September 2007. The group has previously disclosed its
commitments in terms of the EDA in its Annual Financial Statements and,
as at 31st December 2009, the value of direct and indirect financial
assistance provided to iLima by the group was R172 million. The direct
financial assistance, reflected as a current asset, as well as the
indirect financial assistance, reflected as a contingent liability, (if
incurred), will be set off against the return of the group`s shares by
iLima.
The unwinding of the BEE transaction with iLima is a huge disappointment to
Group Five as the group remains committed to the advancement of broad based
black economic empowerment. However, important lessons have been learnt that
will be applied in future in the structuring of any potential/proposed BEE
transactions.
The unwinding of the iLima element of the Group Five BEE transaction does not
impact upon Group Five`s other BEE shareholders or Group Five`s BEE
management and employee schemes.
Despite the unwind, Group Five`s overall BBBEE rating of Level 3 will remain
in place due to improvements in areas of its scorecard other than ownership,
such as preferential procurement, employment equity, skills transfer and
training.
The group will continue to update shareholders on the formalities to the
unwind process, its related timing and conclusion.
Johannesburg
14 April 2010
Sponsor
Nedbank Capital
Date: 14/04/2010 12:11:02 Produced by the JSE SENS Department.
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