| Tue 13 Dec 2011, 10:00 | | DON - The Don Group Limited - Disposal of Ikapa Tours & Travel (Proprietary) |
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DON
DON
DON - The Don Group Limited - Disposal of Ikapa Tours & Travel (Proprietary)
Limited
THE DON GROUP LIMITED
Incorporated in the Republic of South Africa
(Registration number 1946/023123/06)
Share code: DON ISIN: ZAE000008462
("The Don")
DISPOSAL OF IKAPA TOURS & TRAVEL (PROPRIETARY) LIMITED
1. INTRODUCTION
The board of directors of The Don ("the Board") is pleased to advise
shareholders that Ikapa Tours & Travel (Proprietary) Limited ("Ikapa"),
a 56.66% subsidiary of The Don has successfully concluded an agreement
("the business disposal agreement") with Cullinan Holdings Limited
("Cullinan"), for the sale to Cullinan of the entire business of Ikapa
as a going concern, excluding liabilities ("the business disposal").
In a separate agreement entered into between The Don and Ikapa ("the
equity disposal agreement"), The Don shall sell its entire shareholding
in Ikapa to Ikapa for a total cash consideration of R1, be indemnified
against all future liabilities of Ikapa and shall receive R6 000 000
from the proceeds of the sale of the business of Ikapa to Cullinan, as
detailed in the business disposal agreement ("the equity disposal").
2. THE DISPOSAL
2.1 Nature of Ikapa and rationale for the disposal
The Don acquired a 51.00% shareholding in Ikapa, an inbound tour
operator based in Cape Town, in 2009, and a further 5.66% in 2011.
Ikapa facilitates all aspects of its clients` travel requirements,
including flights, accommodation, car hire and long distance tours
throughout South Africa as well as Botswana, Namibia, Zambia and to the
Victoria Falls in Zimbabwe. At the time, the Board believed that The
Don would obtain marketing exposure, especially from domestic and
international tour groups, which would facilitate an increase in
occupancy rates. However, the purpose for which Ikapa was originally
acquired as stated above, is no longer consistent with The Don`s long-
term strategy of diversifying away from the hotel and leisure sector,
hence the disposal.
2.2 Purchase consideration
In a separate agreement entered into between The Don and Ikapa, The Don
shall sell its entire shareholding in Ikapa to Ikapa for a total cash
consideration of R1, be indemnified against all future liabilities of
Ikapa and shall receive R6 000 000 from the proceeds of the sale of the
business of Ikapa to Cullinan, as detailed in the business disposal
agreement. The proceeds from the sale of Ikapa will be used for working
capital purposes and settlement of existing liabilites.
2.3 Effective date
The effective date of the disposal is 1 November 2011.
2.4 Insolvency Act Provisions
Ikapa and Cullinan have agreed in the business disposal agreement that
notice of this transaction will not be published as contemplated in
Section 34 of the Insolvency Act 24 of 1936, as amended. Ikapa
indemnifies Cullinan against all loss, liability, damage and expense of
every nature whatsoever which Cullinan may suffer as a result of this
disposal not being published.
2.5 Warranties
Warranties as are normal in transactions of this nature have been
provided for in the business disposal agreement.
2.6 Conditions Precedent
There are no outstanding conditions precedents in either the business
disposal agreement or the equity disposal agreement.
3. PRO FORMA FINANCIAL EFFECTS OF THE DISPOSAL
The table below sets out the unaudited pro forma financial effects of
the equity disposal, on The Don`s earnings per share, headline earnings
per share, net asset value per share and tangible net asset value per
share.
The unaudited pro forma financial effects have been prepared to
illustrate the impact of the equity disposal on the reported financial
information of The Don for the year ended 30 June 2011, had the equity
disposal occurred on 1 July 2010 for income statement purposes and on
30 June 2011 for balance sheet purposes.
The unaudited pro forma financial effects have been prepared using
accounting policies that comply with International Financial Reporting
Standards and that are consistent with those applied in the reviewed
financial results of The Don for the year ended 30 June 2011.
The unaudited pro forma financial effects, which are the responsibility
of the directors, are provided for illustrative purposes only and,
because of their pro forma nature may not fairly present The Don`s
financial position, changes in equity, results of operations or cash
flow.
Before the After Percent
equity the age
disposal equity change
disposal (%)
Basic loss per share (cents) (2%)
(11.70) (11.96)
Headline loss per share (cents) (10%)
(10.97) (12.04)
Net asset value per share 47.91 (7%)
(cents) 44.50
Tangible net asset value per (7%)
share (cents) 47.85 44.50
Weighted average number of 294 485 303 294 485
shares in issue 303
Notes:
1. The amounts in the "Before the equity disposal" column have been
extracted from the reviewed financial results of The Don for the
year ended 30 June 2011.
2. The amounts in the "After the equity disposal" column reflect the
financial effects of the equity disposal on The Don.
3. The effects on earnings per share and headline earnings per share
are calculated based on the assumption that the equity disposal
was effected on 1 July 2010.
4. The effects on net asset value per share and tangible net asset
value per share are calculated based on the assumption that the
equity disposal was effected on 30 June 2011.
4. CLASSIFICATION OF THE DISPOSAL
The equity disposal is classified as a Category 2 transaction in terms
of the Listings Requirements of the JSE Limited.
13 December 2011
Sponsor
Merchantec Capital
Date: 13/12/2011 10:00:01 Produced by the JSE SENS Department.
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