| Wed 27 Oct 2010, 11:05 | | TAS - Taste Holdings Limited - Financial effects of the acquisition of ST |
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TAS
TAS
TAS - Taste Holdings Limited - Financial effects of the acquisition of ST
Elmo`s and withdrawal of the cautionary announcement
TASTE HOLDINGS LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 2000/002239/06)
JSE code: TAS
ISIN: ZAE000081162
("Taste" or "the company")
FINANCIAL EFFECTS OF THE ACQUISITION OF ST ELMO`S AND WITHDRAWAL OF THE
CAUTIONARY ANNOUNCEMENT
INTRODUCTION
Shareholders are referred to the announcement, dated 30 September 2010,
relating to the acquisition by Scooters Pizza (Pty) Limited, a wholly-owned
subsidiary of Taste, of the franchising, food manufacturing and distribution
businesses operated by St Elmo`s Trading Company (Pty) Limited ("St Elmo`s"),
St Elmo`s Advertising CC and Halben Foods CC ("the transaction"), which
announcement did not contain the financial effects of the transaction.
UNAUDITED PRO FORMA FINANCIAL EFFECTS OF THE TRANSACTION
The unaudited pro forma financial effects of the transaction, for which the
directors are responsible, are provided for illustrative purposes only to show
the effect of the transaction on earnings per share ("EPS"), diluted earnings
per share ("DEPS"), headline earnings per share ("HEPS") and diluted headline
earnings per share ("DHEPS") as if the transaction had occurred on 1 March
2010 and on net asset value ("NAV") and net tangible asset value ("NTAV") per
share as if the transaction had occurred on 31 August 2010. Because of their
nature, the unaudited pro forma financial effects may not give a fair
presentation of the group`s financial position and performance. The unaudited
pro forma financial effects has been compiled from the unaudited consolidated
financial results of Taste for the six months ended 31 August 2010 and are
presented in a manner consistent with the format and accounting policies
adopted by Taste and have been adjusted as described in the notes below:
%
Notes Before After change
EPS (cents) 2.1 2.4 14.3
DEPS (cent) 2.0 2.2 10.0
HEPS (cents) 2.1 2.3 9.5
DHEPS (cents) 2.0 2.2 10.0
NAV (cents) 61.1 60.9 (0.3)
NTAV (cents) 24.4 21.1 (13.5)
Number of shares in issue 170 161 170 161 -
(`000)
Fully diluted number of
shares in
issue (`000) 180 715 180 715 -
Notes:
1. The "Before" column has been extracted from the unaudited results of
Taste for the six months ended 31 August 2010.
2. EPS, DEPS, HEPS and DHEPS effects, as reflected in the "After"
column, are based on the following assumptions and information:
- the transaction was effective 1 March 2010;
- the purchase price of R9.36 million as well as transaction
costs of R0.51 million were paid on 1 March 2010 in cash,
financed entirely through borrowings incurring interest at
10.65% per annum (pre tax);
- the total after tax profit attributable to the acquired
business is R1.15 million for six months based on the
management accounts for the six months ended 30 June 2010; and
- all adjustments, except those relating to transaction costs
(which were expensed), are regarded as being recurring of
nature. Excluding transaction costs, EPS would have been 2.6
cents (23.8% increase) and HEPS would have been 2.5 cents
(19.0% increase).
3. NAVPS and TNAVPS effects, as reflected in the "After" column, are
based on the following assumptions and information:
- the transaction was effective 31 August 2010;
- the purchase price and transaction costs were paid on 31 August
2010 in the manner described in note 2 above; and
- net tangible assets acquired are R4.26 million and the excess
of the purchase price over this will comprise intangibles of
R3.1 million, amortised over a period of 20 years, goodwill of
R2.0 million, which is not amortised.
4. These pro forma financial effects do not take into account the
expected synergistic benefits of the transaction, some of which are
outlined below:
- additional revenue and profit from the acquired food
manufacturing facility as a result of it producing sauces and
spices for all the Scooters Pizza and Maxi`s outlets;
- additional revenue and profit from Taste`s current meat
processing facility as a result of it producing pizza toppings
for the approximately 40 St Elmo`s outlets acquired; and
- the reduction in costs in St Elmo`s franchising as a result of
rationalisation of duplicated functions within the Taste Food
division and the relocation of the St Elmo`s head office to
Johannesburg.
WITHDRAWAL OF THE CAUTIONARY ANNOUNCEMENT
Pursuant to the release of the financial effects of the transaction, the
cautionary announcement is hereby withdrawn.
Sandton
27 October 2010
Designated adviser
Vunani Corporate Finance
Date: 27/10/2010 11:05:05 Produced by the JSE SENS Department.
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