SUR : Update announcement relating to specific repurchase circular to Spur shareholders:
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")
UPDATE ANNOUNCEMENT RELATING TO SHARE REPURCHASE CIRCULAR TO SPUR
SHAREHOLDERS
1. INTRODUCTION
Shareholders are referred to the Circular dated 27 August 2019 ("Circular") wherein they were
advised that: -
- Spur had entered into an agreement for the specific repurchase of 10 848 093 ordinary
shares in the share capital of the company ("Spur Shares"), constituting 10% of the total
issued share capital of Spur, from GPI Investments 1 (RF) Proprietary Limited, a wholly
owned subsidiary of Grand Parade Investments Limited ("GPI"), a related party, at a price
of 2400 cents per Spur Share ("GPI Repurchase");
- Spur is separately seeking approval to repurchase 6 635 901 Spur Shares, constituting
6.12% of the total issued share capital of Spur, held in treasury by Share Buy-back
Proprietary Limited, a wholly owned subsidiary of Spur, at a price of 2191 cents per share,
being the market value of such Spur Shares at 25 June 2019 ("Treasury Repurchase");
- Spur will apply for the delisting and cancellation of the repurchased Spur Shares; and
- a general meeting of Spur shareholders will be held on Wednesday, 25 September 2019
("General Meeting"), for the purpose of considering and, if deemed fit, passing, with or
without modification, the special and ordinary resolutions pertaining to the GPI
Repurchase and Treasury Repurchase (collectively "the Transactions").
2. REQUIREMENT FOR SUPPLEMENTARY CIRCULAR
As the Circular was published and distributed during the prohibited period prior to the
publication of Spur's financial results for the year ended 30 June 2019, and the General
Meeting will be held after such publication, the Company undertook to publish a supplementary
circular in terms of section 11.56 of the JSE Limited Listings Requirements at least 10 calendar
days before the date of the General Meeting if, after publication of the financial results on
Thursday, 12 September 2019, any of the following applied:
2.1 there has been a significant change affecting any matter contained in the Circular;
2.2 a significant new matter has arisen, the inclusion of information on which new matter
would have been required to be disclosed in the Circular had such information been
known at the time of publication of the Circular;
2.3 there has been a change of 10% or more between the pro forma financial effects of the
Transactions included in the Circular, prepared on the basis of the published interim
results for the six months ended 31 December 2018, when measured against the pro
forma financial effects of the Transactions prepared on the basis of the Company's
published financial results for the year ended 30 June 2019; or
2.4 any other matter or element that could influence a Spur Shareholder's assessment of
the Transactions has become apparent.
Shareholders are referred to the financial results of the company published on SENS on 12
September 2019 and available on the company's website at
https://www.spurcorporation.com/investors/results-centre/ ("year-end results"). The directors
of the company advise that they have considered the Circular and the year-end results and,
having regard to the information disclosed therein, concluded that none of the abovementioned
conditions apply and the publication of a supplementary circular is therefore not required. The
updated pro forma financial effects of the Transactions, based on the financial results for the
year ended 30 June 2019, are set out below.
KPMG Inc., the reporting accountants, and BDO Corporate Finance Proprietary Limited, the
independent expert, whose reports are included in the Circular, have not withdrawn or
amended these reports as a result of the information contained in the year-end results
announcement and this SENS announcement.
3. UPDATED PRO FORMA FINANCIAL EFFECTS OF THE TRANSACTIONS
The pro forma financial information set out below is provided for illustrative purposes only and,
because of its nature, may not fairly present the financial position or results of operations of
Spur and its subsidiaries (the "Group").
The pro forma financial information has been prepared to illustrate the impact of the
Transactions on the published financial information of the Group for the year ended 30 June
2019 based on the assumption that each of the GPI Repurchase, Treasury Repurchase and
collectively, the Transactions, took place on 1 July 2018 for purposes of the pro forma
Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income and
on 30 June 2019 for purposes of the pro forma Condensed Consolidated Statement of
Financial Position. The pro forma financial information has been prepared using the
accounting policies of Spur, which comply with IFRS and are consistent with those applied in
Spur's reviewed condensed consolidated financial statements for the year ended 30 June
2019.
The pro forma financial information is the responsibility of the Directors.
After
Before GPI After GPI Treasury Treasury After
Transactions Repurchase Repurchase % Repurchase Repurchase % Transactions %
(note 1,2,3) (note 4) (note 5) Change (note 6) (note 7) Change (note 8) Change
Total number of
shares in issue 108 480 926 (10 848 093) 97 632 833 (10.0%) (6 635 901) 101 845 025 (6.1%) 90 996 932 (16.1%)
Number of shares
in issue net of
shares held by
subsidiary -
companies 94 789 327 (10 848 093) 83 941 234 (11.4%) 94 789 327 0.0% 83 941 234 (11.4%)
Weighted average
number of shares -
in issue 95 065 149 (10 848 093) 84 217 056 (11.4%) 95 065 149 0.0% 84 217 056 (11.4%)
Diluted weighted
average number of -
shares in issue 95 321 717 (10 848 093) 84 473 624 (11.4%) 95 321 717 0.0% 84 473 624 (11.4%)
Basic earnings per
share (cents) 173.69 13.51 187.20 7.8% (0.04) 173.65 0.0% 187.16 7.8%
Diluted earnings
per share (cents) 173.22 13.41 186.63 7.7% (0.04) 173.18 0.0% 186.59 7.7%
Headline earnings
per share (cents) 173.68 13.51 187.19 7.8% (0.04) 173.64 0.0% 187.15 7.8%
Diluted headline
earnings per share
(cents) 173.21 13.41 186.62 7.7% (0.04) 173.17 0.0% 186.58 7.7%
Net asset value
per share (cents) 924.47 (180.75) 743.72 (19.6%) (0.73) 923.74 (0.1%) 742.90 (19.6%)
Net tangible asset
value per share
(cents) 528.26 (231.95) 296.31 (43.9%) (0.73) 527.53 (0.1%) 295.48 (44.1%)
NOTES
1 The pro forma Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income
("SOCI") figures illustrate the possible financial effects as if the Transactions had taken place on 1 July 2018.
2 The pro forma Statement of Financial Position ("SOFP") figures have been based on the assumption that the
Transactions had taken place on 30 June 2019.
3 The pro forma SOCI and SOFP ("Before Transactions" column) are based on the published reviewed
financial information of Spur for the year ended 30 June 2019, as released on SENS on 12 September 2019.
4 The "GPI Repurchase" column relates to the following:
- the repurchase of 10 848 093 Spur Shares for cash from GPI Investments at a price of 2400 cents per
share, or R260 354 232 in aggregate, comprising a 9.1% premium to the 30 day volume-weighted Spur
Share price as at 2 June 2019.
- the redemption of the preference shares in GPI Investments constituting the Spur Group Funding
("Preference Shares"), such that following the implementation of the GPI Repurchase, the amount owed by
GPI Investments to Spur Group will be extinguished, in the amount R100 624 100 as at 1 July 2018 or
R110 210 874 at 30 June 2019.
5 The "After GPI Repurchase" column indicates the pro forma financial information after only the GPI
Repurchase.
6 The "Treasury Repurchase" column relates to the following:
- the repurchase of 6 635 901 Spur Shares for cash from Share Buy-back at 2191 cents per share, being
the market price of the Spur Share on 25 June 2019, the day immediately preceding the signature date of
the Treasury Repurchase Agreement ("Treasury Repurchase"), amounting to R145 392 591 in aggregate.
7 The "After Treasury Repurchase" column indicates the pro forma financial information after only the
Treasury Repurchase.
8 The "After Transactions" column indicates the pro forma financial information after both the GPI Repurchase
and Treasury Repurchase transactions.
9 The carrying value of the Preference Shares at 1 July 2018 amounted to R96 570 869. On the assumption
that the Preferences Shares are redeemed at 1 July 2018, the gross receivable would have amounted to
R100 695 351 (including capitalised transaction costs), and cash inflow on redemption would have
amounted to R100 624 100. Upon the adoption of IFRS 9: Financial Instruments, the Group impaired the
Preference Share receivable to the extent of R4 124 482 as a result of expected credit losses, which
impairment was charged directly to opening retained earnings at 1 July 2018. Had the Preference Shares
been redeemed on 1 July 2018, the Group would have recognised a gain on the derecognition of a financial
asset carried at amortised cost amounting to R4 124 482 in profit or loss for the year ended 30 June 2019.
In addition, the Group had recognised further impairment losses on the Preference Shares relating to
expected credit losses in the year to 30 June 2019 amounting to R6 687 854, which would not have been
necessary had the Preference Shares been redeemed on 1 July 2018. The sum of the aforementioned gain
on derecognition of the financial instrument and the reversal of the impairment loss, less the costs relating
to the early settlement of the Preference Shares (refer note 14 below), have been recognised in operating
profit before finance income. Amortisation of capitalised transaction costs relating to the Preference Shares
in the amount of R57 000, recognised as a reduction in interest income for the year to 30 June 2019, has
also been reversed against interest income in profit or loss (refer note 10 below).
10 Dividend income of R9 529 774 on the Preference Shares earned by the Group (recorded as interest income
as the Preference Shares are treated as a loan receivable), would not have been earned had the Preference
Shares been redeemed on 1 July 2018. The dividend accruing on the Preference Shares is 90% of the
prime overdraft rate of interest less amortised initial transaction costs (refer note 9). The dividend income
is non-taxable. This dividend income has been reversed against interest income.
11 Interest of R12 001 441 that would have been forgone on the net cash outflow arising from the GPI
Repurchase, had the transaction occurred on 1 July 2018, has been calculated at 7.4% nominal annual
compounded monthly for the year to 30 June 2019. This is the average rate of interest which the Group
earned on its short term deposits during the year. The interest has been reversed against interest income.
This interest was taxable at the South African corporate tax rate of 28%, resulting in a reduction in the
income tax expense of R3 360 403.
12 Interest of R51 199 forgone on the net cash outflow relating to transaction costs arising from the Treasury
Repurchase has been calculated at 7.4% nominal annual compounded monthly for the year to 30 June
2019. This is the average rate of interest which the Group earned on its short term deposits during the
year. This interest was taxable at the South African corporate tax rate of 28%, resulting in a reduction in
the income tax expense of R14 336.
13 The carrying value of the Preference Shares at 30 June 2019 amounted to R99 412 788. On the assumption
that the Preferences Shares are redeemed at 30 June 2019, the gross receivable would have amounted to
R110 225 124 (including capitalised transaction costs), and cash inflow on redemption would have
amounted to R110 210 874. Upon the adoption of IFRS 9: Financial Instruments, the Group impaired the
Preference Share receivable to the extent of R4 124 482 as a result of expected credit losses, which
impairment was charged directly to opening retained earnings at 1 July 2018. In addition, the Group had
recognised further impairment losses on the Preference Shares relating to expected credit losses in the
year to 30 June 2019 amounting to R6 687 854. On the basis that the Preference Shares are fully redeemed
as at 30 June 2019, the Group would have recognised a gain on the derecognition of a financial asset
carried at amortised cost, amounting to the aggregate of the aforementioned impairment losses, included
in profit or loss. In addition, the balance of the capitalised transaction costs in the amount of R14 250 would
also be reversed to profit or loss on the redemption of the Preference Shares at 30 June 2019.
14 One-off legal, advisory and transaction costs of an estimated R2 451 506 are expected to be incurred in
respect of the GPI Repurchase 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 costs, R2 348 006
are in respect of costs that are directly attributable to the acquisition by the company of the company's own
shares and have accordingly been charged to equity (retained earnings). Costs of R103 500 relate to the
redemption of the Preference Shares and have been charged to profit or loss. These costs are not expected
to be tax deductible.
15 The original cost to the Group of the Treasury Shares referred to in note 6 as at 30 June 2019 was
R110 434 482. Upon the acquisition of the Treasury Shares by Spur, and subsequent cancellation of those
shares, the original cost of the Treasury Shares has been reallocated within equity from 'Shares
repurchased by subsidiaries' to 'Retained earnings' in the SOFP.
16 One-off legal, advisory and transaction costs of an estimated R691 881 are expected to be incurred in
respect of the Treasury Repurchase 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. These costs are directly
attributable to the intragroup transfer of treasury shares and have accordingly been charged to equity
(retained earnings).
Cape Town
13 September 2019
Sponsor
Sasfin Capital,
a member of the Sasfin Group
Legal Advisor
Bernadt Vukic Potash & Getz
Date: 13/09/2019 09:00:00
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