SPUR CORPORATION LIMITED - Financial effects and withdrawal of cautionary announcement
04 September 2014 9:00
SUR 201409040011A
Financial effects and withdrawal of cautionary announcement
SPUR CORPORATION LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1998/000828/06)
Share code: SUR
ISIN: ZAE 000022653
(“Spur” or “the company”)
FURTHER ANNOUNCEMENT REGARDING THE BROAD-BASED BLACK ECONOMIC
EMPOWERMENT TRANSACTION (“B-BBEE TRANSACTION”) BETWEEN GRAND PARADE
INVESTMENTS LIMITED (“GPI”) AND SPUR AND THE DONATION TO SPUR FOUNDATION,
FINANCIAL EFFECTS AND WITHDRAWAL OF CAUTIONARY
1. INTRODUCTION
Shareholders are referred to the announcement dated 31 July 2014 wherein they were advised
that Spur had entered into various agreements in terms of which: -
1.1 a wholly owned subsidiary of GPI (“BEECo”) will subscribe for 10 848 093 ordinary issued
shares of the company (“Subscription Shares”), constituting 10% of the post B-BBEE
Transaction issued share capital of Spur as a specific issue of shares for cash and for a
total subscription price of R294.66 million (“BEECo Issue”);
1.2 GPI and BEECo will be restricted from trading the Subscription Shares without the
express permission of Spur for a period of five years from the effective date of the B-
BBEE Transaction (“Lock-in Period”) and Spur (or its nominee) will under certain
circumstances, such as breach by GPI of its empowerment obligations to Spur, have the
right to acquire some or all of the Subscription Shares during the Lock-in Period (“the
Potential Specific Repurchase”);
1.3 the B-BBEE Transaction will be funded through a combination of cash and preference
share funding as follows:
1.2.1 The Standard Bank of South Africa Limited will partially fund the B-BBEE
Transaction through a subscription for A class and B class preference shares
in BEECo with a combined subscription value of R150.0 million;
1.2.2 Spur will partially fund the B-BBEE Transaction through a subscription for C
class preference shares with a combined subscription value of R72.33 million
in BEECo (“Spur Funding”), which will provide 24.5% of the funding
requirement of BEECo for the Specific Issue; and
1.2.3 GPI will provide the balance of the funding required, being R72.33 million,
from existing cash resources; and
1.4 the board of directors of Spur has approved the donation of 100 000 Spur shares per
annum for five consecutive years to the Spur Foundation Trust (“Spur Foundation”) (“B-
BBEE Donation”) in order to provide the Spur Foundation with the annuity income it needs
to sustain its charitable activities. The shares to be donated are currently held as treasury
shares.
2. FINANCIAL EFFECTS
The financial effects of the B-BBEE Transaction, the Spur Funding, the Potential Specific Repurchase
and the B-BBEE Donation (“transactions”) have now been finalised.
The table below illustrates the pro forma financial effects of the transactions based on the published
results for the six-month period ended 31 December 2013. The preparation of the pro forma financial
effects is the responsibility of the directors of Spur. The pro forma financial effects have been
prepared for illustrative purposes only to provide information on how the transactions may have
impacted on Spur’s results and financial position and, due to the nature thereof, may not give a fair
reflection of Spur’s results and financial position.
Before the B-
BBEE After B-BBEE
Transaction and Transaction Percentage
B-BBEE Donation B-BBEE and B-BBEE Change
Transaction Donation %
Gross number of shares in
issue 97 632 833 10 848 093 108 480 926 11.1
Net number of shares in
issue* 85 633 007 10 848 093 96 481 100 12.7
Weighted average number
of shares in issue 85 633 007 10 848 093 96 481 100 12.7
Diluted weighted average
number of shares in issue 85 633 007 10 848 093 96 481 100 12.7
Basic earnings per share
(cents) 84.99 31.87 (62.5)
Diluted earnings per share
(cents) 84.99 31.87 (62.5)
Headline earnings per
share (cents) 85.14 32.01 (62.4)
Diluted headline earnings
per share (cents) 85.14 32.01 (62.4)
Net asset value per share
(cents) 594.06 831.30 39.9
Net tangible asset value
per share (cents) 195.56 477.60 144.2
* Shares in issue less shares repurchased by a wholly-owned subsidiary company and share
incentive special purpose entity.
Notes:
1. The pro forma Statement of Comprehensive Income ("SOCI") figures illustrate the possible financial
effects as if the transactions had taken place on 1 July 2013.
2. The pro forma Statement of Financial Position (“SOFP”) figures have been based on the assumption
that the transactions had taken place on 31 December 2013.
3. The “Before the B-BBEE Transaction and B-BBEE Donation” column is based on the published
unaudited financial information of Spur for the six-month period ended 31 December 2013, as released
on SENS on 27 February 2014.
4. The “B-BBEE Transaction” column relates to the following:
- the subscription of 10 848 093 new Spur shares for cash by BEECo at a price of 2716 cents per share
(“the BEECo issue”), comprising a 10% discount to the 90-day volume-weighted Spur share price as at
29 July 2014.
- the financing by Spur of 24.5% of the subscription price of the BEECo issue, via a preference share
subscription in BEECo, amounting to R72 327 951.
5. Regarding the B-BBEE Donation of 500 000 Spur shares (comprising 100 000 Spur shares per annum
for five consecutive years) from wholly-owned subsidiary Share Buy-back Proprietary Limited to the
Spur Foundation, an entity which is consolidated in accordance with IFRS 10 - Consolidated financial
statements, and in respect of which non-controlling interests are reflected as 100%:
- it is assumed that there are no tax consequences to the donation of the shares in question; and
- the donation is eliminated on consolidation as it is intercompany from a group perspective and the
shares will consequently continue to be reflected as treasury shares.
Consequently, there is no impact to the SOFP at 31 December 2013 or the SOCI for the period then
ended and the financial effects of this transaction have therefore not been separately disclosed.
6. The "After B-BBEE Transaction and B-BBEE Donation" column indicates the pro forma financial
information after both the B-BBEE Transaction and B-BBEE Donation.
7. The investment in preference shares in BEECo with a nominal value of R72 327 951 (which is the
amount paid by Spur to BEECo) is initially recognised at fair value plus directly attributable transaction
costs in accordance with IAS39 – Financial Instruments: Recognition and Measurement. Fair value,
determined in accordance with IFRS13 – Fair Value Measurement, amounts to R72 327 951. The rate
of dividends applicable to the preference shares is commensurate with similar transactions and is
therefore considered market related. Consequently, the nominal value of the preference shares was
determined to be equal to their fair value as at the date of initial recognition. B-BBEE Transaction costs
that are directly attributable to the acquisition of the preference shares amount to R285 000 (also see
note 9 below), resulting in an aggregate carrying value on initial recognition of R72 612 951.
8. The difference between the market value and the subscription price of the BEECo issue of
R48 686 241 is recognised as a charge to profit or loss in accordance with IFRS2 – Share Based
Payments, with a corresponding credit to equity. It is assumed that this charge will not be tax
deductible.
9. One-off transaction costs of R1 604 003 have been incurred in respect of the B-BBEE Transaction.
These include VAT (as Spur is not in a position to claim the related input tax credits) and have been
assumed to be non-tax deductible. Of these amounts R285 000 have been included in the carrying
value of the preference shares (refer note 7) and R1 033 889 are in respect of costs directly attributed
to the BEECo issue and have been charged to equity (retained earnings) in accordance with IAS32 –
Financial Instruments: Presentation. The balance of the costs have been charged to profit or loss.
10. Interest of R5 777 540 on the net cash received on the proceeds of the issue of shares has been
calculated at 5.1% nominal annual compounded monthly. This is the average rate of interest which the
group earned on its short term deposits during the period. This interest is assumed to be taxable.
11. Dividends of R2 834 486 calculated on the preference shares has been calculated at 7.7%, being 90%
of the prevailing prime overdraft rate of interest for the period, nominal annual compounded monthly.
These dividends are assumed to be dividends for the purposes of tax and therefore exempt from tax,
but are treated as finance income for the purposes of IFRS.
12. As a consequence of the directly attributable transaction costs being included in the carrying value on
initial recognition of the preference shares referred to in note 7, the rate of return implicit in the carrying
value of the preference shares on initial recognition is used to recognise subsequent finance income.
Consequently, the finance income referred to in note 11 is reduced by an amount of R18 726.
13. Interest of R40 902 is estimated to have been lost in respect of the cash disbursed on the transaction
costs. The interest is calculated based on an interest rate of 5.1% nominal annual compounded
monthly. This is the average rate of interest which the group earned on its short term deposits during
the period. The reduced interest is assumed to reduce taxable income.
3. WITHDRAWAL OF CAUTIONARY
Having regard to the information published in this announcement caution is no longer required by
shareholders when dealing in their Spur securities. A circular containing full details of the transactions and
convening a general meeting of Spur shareholders on 3 October 2014 will be posted to shareholders today..
4 September 2014
Sponsor
Sasfin Capital
Legal Advisor
Bernadt Vukic Potash & Getz
Reporting Accountants
KPMG Inc.
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