| Tue 9 Dec 2003, 11:54 | | ANNOUNCEMENT REGARDING THE IN-PRINCIPLE APPROVAL |
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ACUITY GROUP HOLDINGS LIMITED - ANNOUNCEMENT REGARDING THE IN-PRINCIPLE APPROVAL
OF THE PROPOSED LISTING OF ACUITY (TO BE RENAMED MILKWORX LIMITED) ON THE
ALTERNATIVE EXCHANGE ("ALTX")
ACUITY GROUP HOLDINGS LIMITED
(Incorporated in the Republic of South Africa)
(Registration number: 1998/011074/06)
Share Code: ACY ISIN: ZAE000018149
("Acuity" or "the company")
ANNOUNCEMENT REGARDING THE IN-PRINCIPLE APPROVAL OF THE PROPOSED LISTING OF
ACUITY (TO BE RENAMED MILKWORX LIMITED) ON THE ALTERNATIVE EXCHANGE ("ALTX")
1. Introduction
Further to the announcement dated 23 June 2003 ("the 23 June announcement"),
Radagast Capital is authorised to announce that the Listings Advisory Committee
("LAC") of AltX has, subject to the conditions precedent set out n paragraph 5
below, approved the proposed reverse listing of Milkworx Limited ("Milkworx")
into Acuity and the subsequent listing of Milkworx onto the Alternative
Exchange.
Shareholders are, however, advised that the final listing of the company is in
the discretion of the JSE and contingent upon the JSE"s assessment of the
suitability for listing of the company after the proposed transaction.
2. Nature of the transaction
The transaction which includes, inter alia, the acquisitions described below,
represents the amalgamation of the ice cream manufacturing, packaging and
trading businesses conducted by Avondale (Pty) Ltd ("Avondale") and S Roux and
the CPM Trust trading as Cream Star Ice Cream ("Cream Star") ("the vendors").
Avondale and Cream Star will reverse list into Acuity through the issue by
Acuity of 392,561,656 shares (pre-consolidation - refer to paragraph 4 below) to
the vendors. Acuity shareholders will simultaneously be requested to approve the
acquisition of additional assets complementary to the Avondale and Cream Star
assets, from Creamstar Ice Cream (Pty) Ltd ("Creamstar Ice Cream"), a related
party to the transaction ("the additional assets"). The additional assets
valued at R2,099,000 will be acquired for a purchase consideration of R1,800,000
to be settled by a back-to-back financing arrangement with Creamstar Ice Cream.
Shareholders will also be requested to approve the deferred conditional purchase
agreement of Long Life Dairy Products Africa (Pty) Ltd ("Long Life"), further
details of which were set out in the 23 June announcement.
3. Nature of business
Milkworx will operate as a diversified manufacturing, packaging and trading
entity, producing ice cream and related products for distribution into the
emerging, catering and retail markets. It also manufactures, on a contract
basis, for various leading ice cream brands. It is envisaged that, through the
purchase of Long Life, the company will start to expand into other dairy-related
fields including the manufacturing and export of long life yoghurts, milk blends
and flavourings that do not require refrigeration either in the transport or
storage thereof.
4. Financial effects, prospects and profit forecasts
Shareholders are referred to the 23 June announcement wherein the pro-forma
financial effects of the proposed transaction on Acuity are set out.
In order to provide shareholders with financial information relating to the
prospects of Milkworx, a forecast for the years ended June 2004 and June 2005 is
set out below. These forecasts relate solely to the amalgamated businesses of
Avondale and Cream Star that are being acquired, incorporating the related party
transaction, but excluding the Long Life effect. These forecasts have been
reviewed by Compendium (Pretoria) Incorporated, the auditors of Acuity, whose
report is available for inspection at the registered office of Acuity.
Milkworx projected income Projected 12 Projected 12
statements months ended months ended
June 2004(1) July 2005(1)
(R `000) (R `000)
Sales 53,075 59,975
Cost of sales (32,727) (36,798)
Gross profit 20,348 23,177
Operating costs (17,859) (20,002)
Operating income before 2,489 3,175
interest and taxation
Net interest received/(paid) (84) (281)
Operating income before 2,405 2,894
taxation
Taxation (722) (868)
Net income for the period 1,683 2,026
Number of shares before 490 702 070 490 702 070
consolidation(2)
Earnings per share before 0.34 0.41
consolidation (cents)
Number of shares after 98 140 414 98 140 414
consolidation(3)
Earnings per share after 1.72 2.25
consolidation (cents)
Notes:
(1) Reflecting the proposed change in the financial year-end of Acuity from 31
March to 30 June, so as to create two comparable six-month periods given the
seasonality of the ice cream manufacturing business.
(2) The LAC has recommended that the share capital of Milkworx be consolidated
before the implementation of the listing.
(3) Earnings per share after consolidation calculation was based on an assumed
consolidation of 5:1. The extent of this consolidation is, however, subject to
final arrangements with AltX.
(4) Material assumptions used in the profit forecast:
* Organic turnover growth of 15%, about one-half of that achieved in the last
three years, was projected. In addition, major new contracts were incorporated
after adjusting for timing and probability of realization.
* General operating costs were increased by 8%.
* Initial listing costs of R350,000 and ongoing listing expenses of R200,000 per
annum were included.
* Interest rates were assumed at 15%.
* A constant average exchange rate of R7.50/$ was used.
* Plant and equipment was depreciated at 10% per annum, in line with the
expected economic life.
5. Conditions precedent
The transaction remains subject to the following conditions precedent, which
conditions are indivisible and include, inter alia, the following:
* approval by regulatory authorities, including the JSE and SRP, to the extent
required; and
* approval by Acuity shareholders of resolutions relating, inter alia, to the
disposal of Acuity"s existing subsidiaries, the consolidation of Acuity"s
issued share capital; the acquisition of Cream Star and Avondale and the
acquisition of additional assets from a related party, an increase in the
authorised and issued share capital of Acuity, the change of name of the company
to Milkworx and the reconstitution of the board of directors.
6. Circular to shareholders
A circular, which is subject to the approval of the JSE and the SRP, containing
full details of the transaction and incorporating revised listing particulars
and a notice of general meeting of Acuity shareholders, is in the process of
being prepared and is expected to be mailed on or about 31 January 2003. The
effective listing of Milkworx on AltX is expected to take place towards the end
of February 2004.
Pretoria
9 December 2003
Corporate Advisors Sponsor
Radagast Capital (Proprietary) Limited LPC Manhattan Sponsors (Pty) Ltd
Date: 09/12/2003 11:22:09 AM Produced by the JSE SENS Department
