| Tue 5 Oct 2004, 15:53 | | Amended Disposal Of Business |
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IFS - Amended Disposal Of Business 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`)
AMENDED DISPOSAL OF BUSINESS AND RENEWAL OF CAUTIONARY
ANNOUNCEMENT
The announcement of yesterday, 4 October 2004, is hereby reproduced in its
entirety with certain corrections in respect of the financial effects.
Disposal of the insurance broking business
Shareholders are advised that an agreement has been concluded for the disposal
of the insurance broking business of IFS Insurance Brokers (Pty) Limited, a
wholly-owned subsidiary of IFS, to Multifund Financial and Insurance Services
(Pty) Limited (`the purchaser`), with effect from 1 October 2004 (`the
disposal`). The unsolicited offer by the purchaser was made at a market-related
price and the rationale for the disposal is to realise value and distribute the
proceeds to IFS shareholders.
The determination of the purchase consideration is formula-linked, having regard
to premium and commission income and underwriting profit actually earned during
the 12 month period ending 30 September 2005. Based on the past performance of
the business, the quantum of the purchase consideration is expected to amount to
approximately R11 million. The purchase consideration is payable in cash as to
R4 891 124 on 1 October 2004, and, as to the balance, subject to adjustment
based on performance, after the final determination of the total purchase
consideration following the first anniversary of the effective date.
The disposal agreement is subject to warranties which are normal for a
transaction of this nature. Mr John Walter Simpson (`Mr Simpson`), the chief
executive officer and controlling shareholder of the company, has undertaken to
vote in favour of the transaction. He has also agreed to a 7-year restraint of
trade for no consideration. In order to facilitate the transfer of the business
to the purchaser, Mr Simpson has agreed to provide the purchaser with consulting
services at a nominal remuneration of R15 000 per month for a minimum period of
3 months, subject to termination on a month`s notice. It is expected that this
arrangement will last for approximately 4 months.
The disposal is subject to fulfilment of the following resolutive conditions:
the regulatory approvals of the JSE Securities Exchange South Africa and the
Securities Regulation Panel; and
the approval of IFS shareholders in general meeting.
Financial effects
Set out in the table below are the unaudited pro forma financial effects in
respect of the disposal of the IFS business on the audited results of the
company for the financial year ended 30 June 2004. The pro forma financial
effects are provided for illustrative purposes only in order to show the effect
of the disposal and because of their pro forma nature may not give a true
picture of the financial position of IFS at 30 June 2004 or the financial
results for the period then ended.
Before After the Change
the disposal (%)
disposal
Earnings per share (cents) 4,21 5,08* 20,51%*
Headline earnings per share 10,10 10,17 0,73%
(cents)
Net asset value per share (cents) 41,90 43,97* 4,94%*
Tangible net asset value per share 13,28 38,93* 193,22%*
(cents)
Number of shares in issue and
weighted average number of shares 34 000 34 000 -
in issue (000`s)
All figures above which have been adjusted are followed by an asterisk.
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 30 June 2004; and
- the disposal having been implemented on 30 June 2004;
* 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 30
June 2004; and
- the disposal 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 disposal are of a capital nature.
Realisation of remaining assets
The company has commenced a process of realising the assets of the car rental
business, Red Car Hire, on a piecemeal basis.
The suspensive condition relating to the sale by 62 Juta Street Braamfontein
(Proprietary) Limited, a wholly-owned subsidiary of IFS, of the company`s head
office building situated at 62 Juta Street, Braamfontein, Johannesburg, had not
been fulfilled and the agreement was accordingly cancelled. As a result, the
board has initiated steps to sell this property and the Norwood property on
auction subject to approval of shareholders in general meeting.
RENEWAL OF CAUTIONARY ANNOUNCEMENT
In view of the ongoing process of realisation of assets, shareholders are
advised that these events may have an impact on the company`s share price and,
accordingly, that shareholders should continue exercising caution when dealing
in the company`s shares.
Johannesburg
5 October 2004
Sponsor
Merchant Sponsors (Proprietary) Limited
Corporate advisor
Corporate and Merchant Advisors Limited
