| Mon 16 Jul 2012, 17:40 | | BASIL READ HOLDINGS LIMITED - COMPANY ANNOUNCEMENT |
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BSR
COMPANY ANNOUNCEMENT
Basil Read Holdings Limited
(Incorporated in the Republic of South Africa)
(Registration number: 1984/007758/06)
Share code: BSR ISIN: ZAE000029781
(?Basil Read? or the ?Company?)
ANNOUNCEMENT OF THE FINANCIAL EFFECTS REGARDING THE BROAD-BASED BLACK
ECONOMIC EMPOWERMENT TRANSACTION FOR AN EFFECTIVE HOLDING BY SIOC CDT
INVESTMENTS HOLDINGS PROPRIETARY LIMITED OF 25.1% OF THE TOTAL ISSUED
SHARE CAPITAL OF BASIL READ (?THE TRANSACTION?), WITHDRAWAL OF CAUTIONARY
ANNOUNCEMENT RELATING THERETO AND REMINDER OF CAUTIONARY
ANNOUNCEMENT RELEASED ON 2 JULY 2012
This announcement follows the announcement released on the Securities Exchange News
Service (?SENS?) on Thursday, 28 June 2012, relating to the Transaction (?the Announcement?).
All expressions defined in the Announcement and used in this announcement shall bear the
meaning assigned to them in the Announcement, unless such words or expressions are
otherwise defined in this announcement.
1. Unaudited pro forma financial effects
The table below sets out the unaudited pro forma financial effects of the issue of the Initial
Ordinary Shares and the issue of the ?A? Ordinary Shares on the published audited results of
Basil Read for the year ended 31 December 2011. The unaudited pro forma financial effects have
been prepared for illustrative purposes only, and because of their nature may not fairly present
Basil Read?s financial position, changes in equity, results of operations or cash flows, nor the
effect and impact of the Transaction going forward.
The directors of the Company are responsible for the compilation, contents and preparation of the
unaudited pro forma financial effects of the Transaction. Their responsibility includes determining
that the unaudited pro forma financial effects have been properly compiled on the basis stated,
which is consistent with the accounting policies of Basil Read, and the pro forma adjustments are
appropriate for the purposes of the unaudited pro forma financial effects disclosed pursuant to the
Listings Requirements of the JSE Limited (?JSE?). The unaudited pro forma financial effects are
presented in a manner consistent in all respects with International Financial Reporting Standards
(?IFRS?), with the SAICA Guide on Pro Forma Financial Information and with the basis on which
the historical financial information has been prepared in terms of accounting policies of Basil
Read as at 31 December 2011.
There has recently been volatility in the Basil Read share price which has a direct effect on
certain assumptions underlying the unaudited pro forma financial effects. Consequently,
shareholders should exercise caution in reading the unaudited pro forma financial effects.
Before the After issue of After the %
Transaction Initial Ordinary Transaction impact
Shares
Earnings per share (cents) 113.88 110.78 39.64 -65.2%
Headline earnings per share
(cents) 139.65 135.01 63.87 -54.3%
Diluted earnings per share
(cents) 113.88 110.78 39.64 -65.2%
Diluted headline earnings per
share (cents) 139.65 135.01 63.87 -54.3%
Net asset value per share
(cents) 1 465.95 1 450.43 1 447.72 -1.2%
Tangible net asset value per
share (cents) 819.74 842.90 840.20 2.5%
Number of shares in issue net of
treasury shares (?000) 123 798 131 681 131 681 6.4%
Diluted number of shares in
issue (?000) 123 798 131 681 131 681 6.4%
Notes and assumptions in calculating the unaudited pro forma financial effects:
1. The financial information in the ?Before the Transaction? column has been based on the
audited consolidated financial statements of Basil Read for the year ended 31 December
2011.
2. The effects on earnings, diluted earnings, headline earnings and diluted headline earnings
per share are based on the following assumptions:
a. The Transaction was effective 1 January 2011.
b. There is no IFRS 2 impact on the issue of the Initial Ordinary Shares as the issue
price of R12.56 per share is above the closing market price of R11.79 per share on
Friday, 6 July 2012, being the last practical date used for calculating the pro forma
financial effects. To the extent that the issue price is at a discount to the market
price on the issue date, an IFRS 2 charge equivalent to the extent of the discount
will be charged to the income statement.
c. The economic substance of the issue of the ?A? Ordinary Shares is the granting of a
call option on Basil Read shares. A once-off IFRS 2 charge on the issue of "A"
Ordinary Shares of R89.6 million has been accounted for. On initial recognition,
being the date on which the ?A? Ordinary Shares are issued, the derivative financial
liability will be measured at fair value using a Monte Carlo simulation based option
pricing model. The assumptions used in this model for purposes of the pro forma
financial effects include a closing spot price of R11.79 per share as at 6 July 2012,
being the latest practical date, volatility of 33 percent and a dividend yield that
ranges between 2.5 percent and 4.0 percent during the term of the option. To the
extent that the actual spot price on initial recognition is higher than the assumed
spot price of R11.79 used for purposes of illustrating the pro forma financial effects,
the actual IFRS 2 charge will exceed the R89.6 million pro forma IFRS 2 charge.
The converse will also apply.
d. The calculation of diluted earnings and diluted headline earnings per share at
reporting dates is determined on the number of shares to be issued for no
consideration which is calculated as the difference between the average market
price of Basil Read shares for the period, minus the value of the notional loan at the
reporting date. Based on the share price of Basil Read on 6 July 2012 and the fair
value of the notional loan, there is currently no diluting effect arising on the issue of
the A Ordinary Shares.
e. The cash proceeds from the issue of the Initial Ordinary Shares and the ?A?
Ordinary Shares will be used to repay interest bearing debt at an average rate of
7.2 percent, before taxation, which interest saving thereon is of a continuing nature.
f. Tax at 28 percent on the interest adjustment has been applied.
g. Once-off transaction costs of R7.8 million excluding Value Added Tax (?VAT?) have
been apportioned equally between equity and profit and loss and are once-off in
nature.
3. The effects on net asset value per share and tangible net asset value per share, are based
on the following assumptions:
a. The Transaction was effective 31 December 2011.
b. The issue of 7 883 243 Initial Ordinary Shares at R12.56 per share for a cash
consideration of R99.0 million. To the extent that the issue price is at a discount to
the market price on the issue date, an IFRS 2 charge equivalent to the extent of the
discount will be charged to the income statement.
c. The issue of 33 607 507 "A" Ordinary Shares issued of at R0.01 per share for a
cash consideration of R0.3 million. The economic substance of the issue of the ?A?
Ordinary Shares is the granting of a call option on Basil Read shares. A once-off
IFRS 2 charge on the issue of "A" Ordinary Shares of R89.6 million has been
accounted for. On initial recognition, being the date on which the ?A? Ordinary
Shares are issued, the derivative financial liability will be measured at fair value
using a Monte Carlo simulation based option pricing model. The assumptions used
in this model for purposes of the pro forma financial effects include a closing spot
price of R11.79 per share as at 6 July 2012, being the latest practical date, volatility
of 33 percent and a dividend yield that ranges between 2.5 percent and 4.0 percent
during the term of the option. To the extent that the actual spot price on initial
recognition is higher than the assumed spot price of R11.79 per share used for
purposes of illustrating the pro forma financial effects, the actual IFRS 2 charge will
exceed the R89.6 million pro forma IFRS 2 charge. The converse will also apply.
d. The cash proceeds from the issue of the Initial Ordinary Shares and the ?A?
Ordinary Shares will be used to repay debt.
e. Once-off transaction costs of R7.8 million excluding VAT have been apportioned
equally between equity and profit and loss and are once-off in nature.
4. There are no post balance sheet events which need adjustment to the pro forma financial
information.
2. Withdrawal of cautionary announcement
Shareholders of Basil Read are advised that as the unaudited pro-forma financial effects of the
Transaction have now been released, the cautionary announcement published on 28 June 2012
has been withdrawn.
3. Reminder of cautionary announcement released on 2 July 2012
Shareholders are reminded that the Company remains under cautionary as a result of the
cautionary announcement released on SENS on Monday, 2 July 2012 and published in the press
on Tuesday, 3 July 2012.
Johannesburg
16 July 2012
Corporate Advisor to Basil Read: Deloitte & Touche Corporate Finance
Lead and Transaction Sponsor to Basil Read: Deloitte & Touche Sponsor Services (Pty) Limited
Sponsor to Basil Read: Macquarie First South Capital (Pty) Limited
Attorneys to Basil Read: Werksmans & Ramsay Webber Inc.
Independent expert: BDO Corporate Finance (Pty) Ltd
Reporting accountants and auditors: PwC Inc.
Corporate Advisor and Fund Manager to SIOC: Arkein Capital Partners
Investment Bank and Corporate Advisor to SIOC: Nedbank Capital
Attorneys to SIOC: Schindlers Attorneys, Notaries & Conveyancers
Date: 16/07/2012 05:30:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
