| Mon 13 Sep 2010, 7:05 | | ABL/ABLP - African Bank Investments Limited - Integration of Ellerines Financial |
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ABL ABLP
ABL
ABL/ABLP - African Bank Investments Limited - Integration of Ellerines Financial
Services into African Bank
AFRICAN BANK INVESTMENTS LIMITED
(Incorporated in the Republic of South Africa)
(Registered bank controlling company)
(Registration number 1946/021193/06)
(Ordinary share code: ABL) (ISIN: ZAE000030060)
(Preference share code: ABLP) (ISIN: ZAE000065215)
(ABIL or the group)
INTEGRATION OF ELLERINES FINANCIAL SERVICES INTO AFRICAN BANK
ABIL announced today that it has finalised the transaction to transfer the
financial services business of its subsidiary Ellerine Furnishers (Pty) Ltd
(Ellerines) to fellow subsidiary African Bank Limited (African Bank). The
transaction is an important milestone in the realisation of the group`s
strategic objectives for the Ellerines acquisition.
African Bank will acquire Ellerines` financial services business for a sum of
approximately R7,3 billion, comprising primarily its net advances book of
approximately R3,0 billion, the related deferred tax asset of R0,3 billion and
the right to grant credit in all Ellerines` South African stores and goodwill
relating to the financial services business of R4,0 billion. The assets being
acquired have largely been under African Bank`s underwriting control since 2008.
The transaction is effective from the close of business on 7 September 2010,
being the accounting month end of Ellerines.
The acquisition price will be settled through a combination of R1,1 billion of
cash and the balance on loan account. Ellerines will utilise the cash proceeds
primarily to settle existing funding from third party banks, with the balance
available to fund its working capital requirements. The loan account, after set-
off of R0,5 billion of inter-company funding, will be transferred as a dividend
in specie by Ellerines to its holding company Ellerine Holdings Limited (EHL),
which in turn will transfer it as a dividend in specie to ABIL.
ABIL will write down the investment in EHL by R5,7 billion and will utilise this
dividend to subscribe for further ordinary shares in African Bank. Of the new
share capital, the portion relating to goodwill will be impaired for both
regulatory and internal capital model purposes, leaving R1,7 billion of
unimpaired new capital for the Bank. A pro forma balance sheet of African Bank
post the transaction is set out at the end of this announcement. The capital
injection would have, on a pro forma basis based on African Bank`s interim
results to 31 March 2010, increased African Bank`s capital adequacy ratio from
24,6% to 33,9%.
The transaction will have no impact on the ABIL group consolidated earnings and
balance sheet for the 2010 financial year, given that it is a transaction
between wholly owned subsidiaries. Clearance has been received from the JSE
Limited and the Reserve Bank.
ABIL will hold a conference call on Monday, 13 September 2010 to discuss the
details of the transaction with interested parties. The conference call will
take the form of a short overview, followed by questions. A slide presentation
covering the overview will be available for download prior to the call on
www.abil.co.za
Time 16:00 (SA time)
LIVE CALL PLAYBACK (available for
South Africa & Other 48 hours)
Toll 011 535 3600 South Africa & Other
011 305 2030
USA Code 2134#
Toll-free 1800 860 2442 USA
UK 1 412 317 0088
Toll-free 0800 917 7042 UK
0808 234 6771
Pro forma financial effects of the acquisition
There is no impact on the ABIL group consolidated financial statements.
The table below sets out the unaudited pro forma financial effects of the
transaction on the balance sheet of African Bank Limited based on the unaudited
interim results of the company for the period ended 31 March 2010.
The unaudited pro forma financial effects are the responsibility of the
directors and have been prepared for illustrative purposes only to provide
information about how the transaction may impact shareholders on the relevant
reporting date and because of its nature may not give a fair reflection of the
subsidiary company`s financial position, changes in equity, results of
operations or cash flows after implementation of the transaction or of the
subsidiary company`s future earnings.
African Bank Limited Balance Sheet
At 31 March 2010
Before the Transaction After the
acquisition (Note 2) acquisiti
(Note 1) on
R million Unaudited
Assets
Short-term deposits and cash 5 066 (1 100) 3 966
Net advances 19 090 3 000 22 090
Deferred tax asset 91 304 395
Amounts owing by holding company and 1 008 (500) 508
fellow subsidiaries
Goodwill - 4 000 4 000
Other assets 1 751 1 751
Total assets 27 006 5 704 32 710
Liabilities and Equity
Total liabilities 23 691 23 691
Total liabilities 23 691 23 691
Share capital 121 - 121
Share premium 1 402 5 704 7 106
Reserves 1 792 1 792
Total equity (capital and reserves) 3 315 5 704 9 019
Total liabilities and equity 27 006 5 704 32 710
Changes to the following ratios: EPS, headline EPS, NAV and NATV have not been
shown above as these ratios have not been previously disclosed for African Bank
Limited.
Notes:
1. Extracted from the published unaudited results of African Bank Limited
for the period ended 31 March 2010.
2. Adjustments to the Balance Sheet have been made on the assumption
that:
2.1. The acquisition and disposal was effective on 31 March 2010;
2.2. The transaction will be settled through a combination of
R1,1 billion in cash and R6,2 billion on inter-company loan
account.
2.3 The loan account is reduced by R0,5 billion of set-off against
inter-company funding
2.4 The remaining R5,7 billion is paid to ABIL as dividend in specie
and utilised to subscribe for ordinary shares in African Bank.
Midrand
13 September 2010
Sponsor
RAND MERCHANT BANK (A division of FirstRand Bank Limited)
Transaction Attorneys to the ABIL Group
PRINSLOO, TINDLE AND ANDROPOULOS INC
Date: 13/09/2010 07:05:03 Produced by the JSE SENS Department.
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