| Tue 17 Aug 2004, 17:51 | | Renewal Of Cautionary Announcement |
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IFS - Disposals, Strategy Forward And Renewal Of Cautionary Announcement
INDEPENDENT FINANCIAL SERVICES LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1950/037061/06)
Share code: IND ISIN code: ZAE000025300
(`IFS` or `the company`)
DISPOSALS, STRATEGY FORWARD AND RENEWAL OF CAUTIONARY ANNOUNCEMENT
Shareholders are advised that following various approaches to acquire certain of
the assets of IFS, the board of IFS has engaged in a process to sell all of the
IFS Group`s assets and, in due course, to distribute the realisation proceeds to
IFS shareholders. The board is considering retaining a portion of the disposal
proceeds in the company in order to constitute IFS as a listed cash shell with a
view to acquiring new assets. Shareholders will be consulted in this regard in
due course.
Shareholders are advised that the company`s panel beating business, trading as
Meyers Motor Metal Work, was sold with effect from 6 April 2004 for a
consideration of R420 000.
The negotiations referred to in the company`s cautionary announcement of 2 July
2004, related inter alia to the disposal of the insurance broking business of
IFS Insurance Brokers (Pty) Limited (`IFSIB`), a wholly-owned subsidiary of IFS,
pursuant to an unsolicited approach by a potential purchaser. These negotiations
are ongoing and have reached a very advanced stage. A due diligence
investigation has been completed in respect of the business of IFSIB and final
agreements are being negotiated. In addition, the board has resolved to look for
buyers in respect of the company`s property in Norwood as well as the assets of
the car rental business, Red Car Hire, as soon as agreement is reached in
respect of the sale of the business of IFSIB. These transactions will be subject
to shareholder approval in due course.
A wholly-owned subsidiary of IFS, 62 Juta Street Braamfontein (Proprietary)
Limited (`the subsidiary`), acquired 2 small properties situated at 155 Smit
Street, Braamfontein, Johannesburg, operating as a commercial letting business,
with effect from 1 February 2004 for a combined consideration of R1,45 million
in cash and the assumption of certain outstanding liabilities to the relevant
local authority for inter alia rates, taxes and other charges. Registration of
transfer of ownership of the above properties to the subsidiary has not yet been
effected as a result of delays in the finalisation of the liabilities to the
local authority concerned. The properties were sold as a going concern for a
purchase consideration of R1 978 500 to Jungle Holdings (Proprietary) Limited in
terms of an agreement dated 12 August 2004 (`the Smit Street sale`). The sale is
voetstoots and the relevant agreement is not subject to any suspensive
conditions. However, it is a term of the agreement that the purchaser furnishes
the subsidiary with guarantees for the amount of the purchase consideration by
31 August 2004. The effective date of this sale will be the date of registration
of transfer of ownership to the purchaser.
Furthermore, in terms of an agreement dated 4 August 2004, the subsidiary has
agreed to sell the company`s head office building situated at 62 Juta Street,
Braamfontein, Johannesburg, to Emerald Sky Trading 24 (Proprietary) Limited, for
a cash consideration of R2,25 million (`the Juta Street sale`). The sale is
voetstoots and subject to the suspensive condition that the purchaser obtains a
loan funding approval from a recognised financial institution for an amount of
not less than R1 687 500 on or before 20 August 2004. The purchaser is obliged
to furnish the subsidiary with guarantees for the amount of the purchase
consideration within 21 days of the fulfilment or waiver of the aforesaid
suspensive condition. The effective date of this sale will be the date of
registration of transfer of ownership to the purchaser.
Both the above transactions arose as a result of unsolicited approaches by the
respective purchasers and the rationale for both disposals by the subsidiary is
to expedite the realisation of all group assets to procure a return of capital
to shareholders.
Financial effects
Set out in the table below are the unaudited pro forma financial effects in
respect of the Smit Street sale and the Juta Street sale on the unaudited
interim financial results of the company for the six months ended 31 December
2003. The pro forma financial effects are provided for illustrative purposes
only in order to show the effect of the abovementioned property disposals and
because of their pro forma nature may not give a true picture of the financial
position of IFS at 31 December 2003 or the financial results for the period then
ended.
Before After Change After Change After Change
the the (%) the (%) both (%)
disposals Smit Juta disposals
Street Street
sale sale
Earnings
per 1,9 2,32 19,7% 3,29 70,0% 3,67 89,7%
share
(cents)
Headline
earnings 3,1 3,15 0,3% 2,86 -8,6% 2,87 -8,3%
per
share
(cents)
Net
asset 43,6 43,99 0,9% 44,25 3,8% 45,62 4,6%
value
per
share
(cents)
Tangible
net 10,3 10,70 3,6% 11,95 15,7% 12,32 19,3%
asset
value
per
share
(cents)
Number
of
shares
in issue 34 000 34 000 - 34 000 - 34 000 -
and
weighted
average
number
of
shares
in issue
(000`s)
Notes:
The pro forma financial effects above are based in their calculation on the
following assumptions:
- the effect on net asset value and tangible net asset value per share is
based on:
* 34 million shares in issue on 31 December 2003; and
* the disposals having been implemented on 31 December 2003;
- the effect on earnings per share and headline earnings per share is based
on:
* 34 million shares in issue during the period from 1 July 2003 to 31
December 2003; and
* the disposals having been effected on 1 July 2003;
- an after tax interest rate of 5,5% per annum; and
- that the gains in respect of the disposals are of a capital nature.
RENEWAL OF CAUTIONARY ANNOUNCEMENT
In view of the abovementioned disclosures and ongoing negotiations, shareholders
are advised that these events may have a material impact on the company`s share
price and, accordingly, that shareholders should continue exercising caution
when dealing in the company`s shares.
Johannesburg
17 August 2004
Sponsor
Merchant Sponsors (Proprietary) Limited
Corporate advisor
Corporate and Merchant Advisors Limited
