| Thu 31 May 2012, 12:00 | | BIO - BioScience Brands Limited - Sale of Nutrimax Brand |
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BIO
BIO
BIO - BioScience Brands Limited - Sale of Nutrimax Brand
BIOSCIENCE BRANDS LIMITED
(Incorporated in the Republic of South Africa)
(Registration Number: 2005/005805/06)
Share code: BIO
ISIN code: ZAE000115036
("BioScience")
SALE OF NUTRIMAX BRAND
1. Introduction
Shareholders are advised that BioScience has disposed of its Nutrimax Brand
("Nutrimax") together with stock, valued at the lower of cost or net
realisable value, to Akacia Healthcare (Proprietary) Limited ("Akacia"),
with effect from 1 June 2012 ("the Transaction"). BioScience originally
acquired Nutrimax during June 2009 for R1,6 million. Nutrimax is a range of
health bars.
2. Details of the Transaction
The consideration to be received by BioScience for the sale of Nutrimax in
terms of the Transaction will be R2.0 million, which is equal to the
annualised turnover of the current financial year of Nutrimax, plus an
additional maximum amount of R600 000 in respect of stock to be valued at a
lower of cost or net realisable value. Such aggregate sale proceeds not
exceeding R2,6 million will be settled by way of a cancellation of debt
owing by BioScience to Akacia and/or its subsidiaries or related
companies..
The terms of the Transaction also provide that subject to the conditions
specified in 2.1 and 2.2 below, BioScience has the right but not the
obligation to reacquire Nutrimax from Akacia one year following the
effective date but not more than two years after the effective date, at its
discretion, subject to the following conditions:
2.1 there should be no amounts owing to Akacia by BioScience that are either
overdue or outside of the terms of the Management Agreement and Loan
Agreement signed by Akacia and BioScience on 5 April 2011, or any other
subsequent agreement entered into between Akacia and BioScience, unless
both parties agree to waiver;
2.2. the repurchase price for Nutrimax would be the annualised turnover of the
current financial year of Nutrimax plus the value of stock valued at lower
of cost or net realisable value.
3. Rationale for the Transaction
The Board of BioScience has resolved to dispose of Nutrimax in order to
maximise the resources and focus of BioScience on its more prominent brands
in the current financial year. In this regard, the Nutrimax brand, which
requires an advertising and support program, would in all likelihood be
adversely affected. In this regard, Akacia, which has a close business
relationship with BioScience and available resources, has agreed to the
Transaction which, inter alia, will involve the ongoing promotion and
advertising of Nutrimax therefore ensuring the continued growth of
Nutrimax.
Depending on growth of BioScience`s other brands and hence profitability,
BioScience may repurchase Nutrimax as explained in paragraph 2 above.
4. Categorisation of the Transaction
In terms of the Listings Requirements of the Johannesburg Stock Exchange
Limited, the Transaction is classified as a Category 2 transaction for
Bioscience, as well as a small related party transaction.
5. Illustrative Financial Effects of the Transaction
The unaudited pro forma financial effects set out below are included for
the purpose of illustrating the effect on BioScience shareholders, of the
sale of Nutrimax, on BioScience`s historical earnings ("EPS"), headline
earnings ("HEPS"), net asset value ("NAV") and net tangible asset value
("NTAV") per BioScience ordinary share for the 6 months ended 31 December
2011 and as at 31 December 2011 respectively.
These unaudited pro forma financial effects:
- are the responsibility of the directors;
- are presented for illustrative purposes only and have not been reviewed by
BioScience`s auditors;
- may, because of their nature, not give a fair reflection of BioSicence`
financial results, changes in equity, cash flows or financial position
after the Transaction; and
- do not necessarily represent or indicate sustainable earnings or future
financial positions.
Unaudited Unaudited Percentage
Before the After the change
Transaction Transaction
EPS and diluted EPS (cents) (0.008) (0.004) 50%
HEPS and diluted HEPS (cents) (0.008) (0.020) (150%)
NAV per share (cents) 0.68 0.69 1%
NTAV per share (cents) (0.75) (0.67) 11%
Notes and assumptions:
1 The financial information has been extracted from the published interim
financial results of BioScience for the period ended 31 December 2011.
2 The "After the Transaction" column reflects the effects of the sale of
Nutrimax on EPS, diluted EPS, HEPS and diluted HEPS for the 6 month period
ended 31 December 2011 based on the following assumptions:
i that the sale of Nutrimax was effective 1 July 2011;
ii the earnings have been adjusted to eliminate the revenue and costs
actually earned and incurred during the period related to Nutrimax,
and to reflect the profit on the disposal of Nutrimax of R420,000.
3 The "After the Transaction" column reflects the effects of the sale of
Nutrimax on NAV and NTAV at 31 December 2011 based on the following
assumptions:
i that the sale of Nutrimax was effective 31 December 2011;
ii that the proceeds of R2 million from the sale of Nutrimax and R345 000
as at 31 December 2011 from the purchase of stock on hand were offset
against the amount owed to Akacia as current portion of borrowings;
iii the profit on disposal of Nutrimax of R420,000 was recognised.
4 Transaction costs were not accounted for as they are immaterial.
31 May 2012
Designated Advisor
PricewaterhouseCoopers Corporate Finance (Proprietary) Limited
Date: 31/05/2012 12:00:02 Produced by the JSE SENS Department.
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