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the year ended 30 June 2001 and further cautionary announcement
Afribrand Holdings Limited
(Incorporated in the Republic of South Africa)
(Registration number 1997/008992/06)
("Afribrand" or "the company" or "the group")
Share code: ABR
ISIN code: ZABR 000012969
Delay in announcement of financial results for the year ended 30 June 2001
Afribrand's financial results will be released later than expected due to
ongoing negotiations, which will further effect the restructuring
initiatives that were announced on 22 August 2001. The finalisation of these
negotiations, if successful, is expected to have a material future effect on
the group's financial position.
Disposal announcement
In addition, Afribrand's board of directors announces that the company has
entered into an unconditional agreement ("the agreement") with Davita
Trading (Proprietary) Limited ("Davita"). In terms of the agreement Davita
has acquired certain assets relating to the manufacture of Dezzy bubblegum
and the rights in and to the Dezzy trademark in respect of all areas outside
of Southern Africa (collectively "Dezzy"), with effect from the close of
business on 31 August 2001.
Rationale for the transaction
The disposal forms part of the restructuring initiatives to dispose of
unprofitable and non-core businesses. The proceeds of the disposal have
been used to reduce the total debt of the group.
Consideration
The disposal consideration for Dezzy of R4.5 million has been settled in
cash.
Financial effects
Based on the published interim financial information of Afribrand for the
six months ended 31 December 2000, the pro-forma financial effects of the
disposal of Dezzy on Afribrand's net asset value per share, loss per share
and headline loss per share are set out below. This pro forma financial
information has been prepared for illustrative purposes only and because of
its nature may not give a true picture of Afribrand's financial position and
results of operations.
Before After Percentage change
disposal (cents) disposal (cents) %
Net asset value per
share 26.5 (1) 27.1 (2) 2.3
Loss per share (14.5) (1) (12.9) (3) 11.0
Headline loss per
share (11.4) (1) (10.4) (4) 8.8
The "before disposal" pro-forma financial information is based on the
published interim results of Afribrand for the six months ended 31 December
2000;
The "after disposal" net asset value per share has been calculated on the
assumption that the disposal took place as at 31 December 2000 and after
taking into account the profit on the disposal of R3.0 million which was
based on the net asset value of Dezzy of R1.5 million at that date and the
cash proceeds of R4.5 million;
The "after disposal" loss per share has been calculated on the assumption
that the disposal took place as at 1 July 2000. Earnings per share have
been adjusted to exclude the results of Dezzy for the 6 months ended 31
December 2000 and to take into account the resulting profit of R3.0 million
on the disposal, cost savings amounting to approximately R400 000 per month
arising as a result of the disposal and the reduction in the interest
charge, calculated at the prime overdraft rate, which would have resulted,
on the assumption that the cash consideration was received on 1 July 2000;
and
The "after disposal" headline earnings per share have been adjusted for the
effect of the profit on the disposal and other exceptional items of
approximately R90 000 that related to Dezzy.
Further Cautionary Notice
Shareholders are advised that the company is involved in further
negotiations to further effect the restructuring initiatives, which if
successfully concluded, may have a material effect on the price at which the
company's shares trade on the JSE.
Shareholders are accordingly advised to continue to exercise caution in
dealing with their Afribrand shares until a further announcement in this
regard is made.
Johannesburg
25 September 2001
Corporate Advisers and Sponsor
KPMG
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