| Tue 4 Feb 2003, 17:34 | | JD Group Limited - Financial Effects Of The Offer |
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JD Group Limited - Financial Effects Of The Offer To Shareholders Of Profurn
Limited ("Profurn") And Withdrawal Of Cautionary
JD Group Limited
(Incorporated in the Republic of South Africa)
(Registration number 1981/009108/06)
Share code: JDG ISIN:ZAE000030771
("JD Group")
FINANCIAL EFFECTS OF THE OFFER TO SHAREHOLDERS OF PROFURN LIMITED ("PROFURN")
AND WITHDRAWAL OF CAUTIONARY
1. INTRODUCTION
Shareholders are referred to the announcement dated 27 January 2003, in which JD
Group shareholders were advised that an agreement had been reached between JD
Group and Profurn in terms of which JD Group will extend an offer to the
shareholders of Profurn for the acquisition of all their Profurn shares, subject
to certain conditions precedent being fulfilled ("the transaction"). The
transaction consideration will be settled by the issue of 53 700 000 JD
Group shares to Profurn shareholders, which equates to an effective exchange
ratio of 19,75846 JD Group shares for every 100 Profurn shares held. The
financial effects of the transaction are now set out in paragraph 2 below.
2. FINANCIAL EFFECTS OF THE TRANSACTION
Financial effects
The financial statements of JD Group are prepared on the historical cost basis
in accordance with South African Statements of Generally Accepted Accounting
Practice ("GAAP") and International Accounting Standards ("IAS"). During the
year ended 31 August 2002, JD Group changed its accounting policy relating to
financial instruments in accordance with IAS 39: Financial Instruments:
Recognition and Measurement.
The financial statements of Profurn are prepared on the historical cost basis in
accordance with South African GAAP.
As a result of the above, a simple aggregation of the financial results of JD
Group and Profurn may not be an accurate presentation of the financial effects
of the acquisition due to the different basis of accounting. The financial
results of Profurn have now been restated to comply with the accounting policies
and estimates of JD Group and the financial effects of the transaction are based
on these restated results(a)(b).
The net asset value of JD Group will increase by 2.2% from 1 724 cents per share
to 1 761 cents per share on implementation of the transaction(c).
The effect of the transaction on historic fully diluted headline earnings, is
calculated and presented in compliance with the Listings Requirements of the JSE
Securities Exchange South Africa and does not give a true reflection of JD
Group`s financial position and performance going forward. The effect on historic
six month fully diluted headline earnings(d) is a decrease from 69.7 cents per
share to 23.7 cents per share.
The financial effects of the transaction are calculated using:
a) Number of shares
112,730 million weighted average number of JD Group ordinary shares in
issue before the transaction is implemented and 53,700 million JD Group ordinary
shares to be issued in terms of the transaction ("transaction shares") resulting
in 165,808 million JD Group ordinary shares, net of treasury shares, in issue
after the transaction has been implemented.
b) Issue price of transaction shares
the issue price of 1 842 cents per transaction share was determined by using the
120 day volume weighted average price preceding the date of announcement
referred to in paragraph 1 above.
c) Net asset value
JD Group`s net asset value per share at 31 August 2002 adjusted for 53,700
million JD Group ordinary shares to be issued to Profurn shareholders in terms
of the transaction and is based on 165,808 million JD Group shares, net of
treasury shares, in issue after the implementation of the transaction.
d) Fully diluted headline earnings
JD Group`s fully diluted headline earnings before the transaction, adjusted for
the restated fully diluted headline earnings of Profurn, as if the transaction
had taken effect on 1 March 2002 based on:
a The restated financial results for the six month period ended 30 June 2002 of
Profurn; and
a The six month period of JD Group ended 31 August 2002. The six month period
was derived from the unaudited interim financial statements for the six month
period ended 28 February 2002 (adjusted for the change in accounting policy
referred to in paragraph 2 above) and the audited financial statements for the
year ended 31 August 2002.
Prospects
As stated in the announcement referred to in paragraph 1 above, the transaction
will enhance value for JD Group shareholders with the extensive increased
efficiencies that will result.
Overall, annualised savings of approximately R70 million to R80 million are
envisaged resulting from, inter alia:-
- the reduction of the number of Morkels and Protea Furnishers stores to
approximately 100 to 120 stores of each brand as JD Group seeks to provide the
appropriate offering across all brands mainly to the middle income market. In
this instance, Protea Furnishers will be repositioned in a similar manner as the
successful repositioning by JD Group of Price `n Pride; and,
- rationalisation of the Profurn head office and infrastructure.
A sub committee of the JD Group board has been established to oversee and
implement a controlled rationalisation programme. At this stage, plans are to
discontinue the Barnetts brand and cut back the operations of Supreme
Furnishers, which trades outside South Africa in eleven African countries.
Various alternatives are being reviewed in this regard, which could lead to
disposal, closure or continuation of operations on a reduced scale in some
countries.
3. WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT
JD Group shareholders are advised that the previous cautionary announcements
issued are hereby withdrawn.
4. FURTHER ANNOUNCEMENTS AND DOCUMENTATION
Further announcements, including salient dates pertaining to the transaction,
will be published on the Securities Exchange News Service and in the press.
As stated in the announcement referred to in paragraph 1 above, a circular is in
the process of being prepared and will be posted to JD Group shareholders in due
course.
Johannesburg
4 February 2003
Investment Bank
and Transaction Sponsor Legal Adviser
Gensec Bank Limited
Corporate Finance Advisory Feinsteins
Date: 04/02/2003 05:17:09 PM Produced by the JSE SENS Department
