Aflease
Gold Limited
(Incorporated
in the Republic
of South Africa)
(Registration
number 1984/006179/06)
JSE
Share code: AFO International Prime QX (OTCQX): AFSGY
ISIN:
ZAE0000758867
(�Aflease�)
AFLEASE
TRADING STATEMENT, ACQUISITION ISSUE, FINANCIAL EFFECTS OF THE ACQUISITION
ISSUE AND THE SCHEME RELATING TO BMA, AND WITHDRAWAL OF CAUTIONARY RELATED TO
THE SCHEME
Further
to the announcement dated 20 November 2008 regarding the execution of an
acquisition agreement by Aflease and BMA in relation to a scheme of arrangement
(�scheme�), the following information is provided:
The
terms used below are as defined in the announcement dated 20 November 2008,
save where a different definition appears herein.
1
Trading statement
In
terms of the Listings Requirements of the JSE Limited, a listed company must
publish a trading statement as soon as it is satisfied that a reasonable degree
of certainty exists that the financial results for the period to be reported
upon next will differ by at least 20 percent from that of the previous
corresponding period.
Aflease
expects that for the year ending 31 December 2008, headline and attributable
earnings per ordinary share will be between 8 and 12 cents per share. The
basic and headline loss per share reported in 2007 were (16.31) and (15.70)
cents per share respectively reported.
In
December 2007 Aflease issued 600 convertible bonds at a value of
R1 million per bond to raise gross proceeds of R600 million, primarily to
finance the development of the Modder East project. The Aflease
convertible bonds mature 5 years from the issue date at the redemption value of
109.6 percent of the nominal value, unless converted into Aflease shares at the
holders� option. All or some of the Aflease convertible bonds can be
converted at a fixed rate of 266 058 shares per bond. The Aflease
convertible bonds are reported at fair value with changes to the fair value
recognised through the income statement. Similarly, the conversion option
within the Aflease convertible bond is a derivative embedded in the liability
which is measured at fair value with changes in fair value recognised in the
income statement. With changes in market conditions from June 2008, the
value of the conversion option has reduced, resulting in an accounting non-cash
gain to Aflease.
The
information in this trading statement has not been reviewed and reported on by
the auditors of Aflease.
The
results for the year ending 31 December 2008 will be published on 31 March
2009.
2
Acquisition issue by Aflease
2.1
Introduction
In
terms of an agreement (�the Trinity Agreement�) entered into on 25 November
2008 (�signature date�) between Aflease and Trinity Asset Management
Proprietary Limited (�Trinity�), Aflease is undertaking a 10 for 1 share swap
with Trinity and will acquire, in a number of separate tranches, not less than
3 million and not more than 7.5 million Randgold & Exploration Company
Limited (�Randgold�) shares at a price per Aflease share of not less than 95
percent of the 30 day volume weighted average traded price of Aflease shares on
the date of acquisition by Aflease of each tranche of Randgold shares to be
acquired by it from Trinity ("acquisition"). The first tranche
will consist of 3 million Randgold shares in exchange for 30 million
Aflease shares at an agreed price of R13.00 per Randgold share and R1.30 per
Aflease share. The remaining tranches will be swapped during the period
of 3 months following on the signature date at the price per Aflease share
and the swap ratio as stated above. At the end of that period all
obligations with regard to Randgold shares not yet swapped, will terminate.
Trinity
currently holds 44 million Aflease shares (i.e. 8.36% of the current issued
share capital before the acquisition).
2.2
Rationale
Aflease
will look to dispose of the Randgold shares in order to raise additional
capital.
Trinity
has undertaken to use its best commercial endeavours to assist in the sale of
the Randgold shares for and on behalf of Aflease.
2.3
Randgold
Randgold
is an investment holding company with assets in the mining industry. It
aims to invest in high quality assets that will ensure maximum return for its
shareholders. It currently holds prospecting rights directly and
indirectly through subsidiary companies which it plans to develop further in
order to add value to its investments. Randgold will only consider mining
where the resource analysis proves that it is commercially prudent to do
so. There are no operational mines in the group. (source: www.
randgold.co.za)
2.4
Conditions precedent
The
acquisition of the first tranche of Randgold shares is not subject to any
conditions precedent.
Aflease
will not be obliged to acquire from Trinity any subsequent tranches of Randgold
shares put to Aflease in terms of the Trinity Agreement, unless all Randgold
shares already acquired by Aflease in terms of the agreement have been disposed
of to the satisfaction of Aflease.
3
Financial effects of the acquisition and the scheme
The
tables below set out the unaudited pro forma financial effects of the
acquisition and the scheme on Aflease ordinary shareholders for the period
ended 30 June 2008. The first table reflects the minimum 30 million
Aflease shares to be issued in terms of the acquisition. The second table
reflects the potential maximum 75 million Aflease shares to be issued.
The
unaudited pro forma financial effects have been prepared for illustrative
purposes only to reflect the pro forma results of BMA after:
*
the acquisition; and
*
the implementation of the scheme and the replacement of the Aflease convertible
bonds with BMA convertible bonds, including the accounting loss which results
from the proposed waiver in terms of the convertible bonds to allow for the
technical change of control of Aflease.
Because
of its nature, the unaudited pro forma financial effects may not give a fair
reflection of BMA�s financial position, changes in equity, results of
operations or cash flows. The unaudited pro forma financial effects are
the responsibility of the Aflease directors and the BMA directors.
These
financial effects may be subject to amendment. Any changes to the
financial effects will be released on the Securities Exchange News Service
(�SENS�) and published in the press.
Based
on a minimum of 30 million Aflease shares in terms of the Trinity
Agreement:
Before
the scheme
����������������������������������������������
Aflease
��������������������������������� Aflease��� adjusted/
�������������������
Aflease����� adjusted����� Aflease
�������������������
(Note 2)���� (Note 3)���� % change
Net asset value/
share (cents)��������
42.85�������� 47.55������� 11.0%
Tangible net
asset value/
share (cents)��������
42.85�������� 47.55������� 11.0%
Total number
of shares������
524 457 006�� 554 457 006
Loss per
share (cents)
*� Basic������������ (3.77)������� (3.56)�������� 5.6%
*� Headline��������� (3.77)������� (3.56)�������� 5.6%
Weighted average number
of shares�����
524 186 173�� 554 186 173
After
the scheme
������������������������������������������� BMA
after/
����������������������������������������������
Aflease
���������������������������� BMA after������� adjusted
������ �����������������������(Note 4)������� % change
Net asset value/
share (cents)������������������� 28.24�������� (40.6%)
Tangible net asset
value/ share (cents)������������ 28.24�������� (40.6%)
Total number
of shares����������������� 578 607 712
Loss per share (cents)
*� Basic����������������������� (25.89)������ (627.2%)
*� Headline�������������������� (25.89)������ (627.2%)
Weighted average number
of shares����������������� 578 607 545
Based
on a maximum of 75 million Aflease shares in terms of the Trinity Agreement:
Before
the scheme
����������������������������������������������
Aflease
��������������������������������� Aflease��� adjusted/
�������������������
Aflease����� adjusted����� Aflease
�������������������
(Note 2)���� (Note 3)��� �%
change
Net asset value/
share (cents)��������
42.85�������� 52.24������� 21.9%
Tangible net
asset value/
share (cents)��������
42.85�������� 52.24������� 21.9%
Total number
of shares������
524 457 006�� 599 457 006
Loss per
share (cents)
*� Basic�� ����������(3.77)������� (3.30)������� 12.5%
*� Headline��������� (3.77)������� (3.30)������� 12.5%
Weighted average number
of shares�����
524 186 173�� 599 186 173
After
the scheme
������������������������������������������� BMA
after/
����������������
������������������������������Aflease
���������������������������� BMA after������� adjusted
����������������������������� (Note 4)������� % change
Net asset value/
share (cents)������������������� 34.14�������� (34.7%)
Tangible net asset
value/ share (cents)������������ 34.14�������� (34.7%)
Total number
of shares����������������� 623 607 712
Loss per share (cents)
*� Basic����������������������� (24.02)������ (627.9%)
*� Headline�������������������� (24.02)������ (627.9%)
Weighted average number
of shares����������������� 623 607 545
Notes
to both tables:
1
The pro forma financial effects are based on the accounting policies adopted by
Aflease, which are in accordance with International Financial Reporting
Standards (�IFRS�). It is assumed that all changes and transactions
described below are effective on:
*
1 January 2008 for purposes of preparing the pro forma financial effects on
earnings.
*
30 June 2008 for purposes of preparing the pro forma financial effects on net
asset values.
2
The �Aflease� column has been extracted from the published unaudited financial
information of Aflease for the six months ended 30 June 2008.
3
The �Aflease adjusted� column represents the effects of the acquisition, after
transaction costs assumed at R100 000. The number of Aflease shares
to be issued in terms of the Trinity Agreement is assumed at 30 000 000, being
the minimum per the Trinity Agreement in the first table and is assumed at 75
000 000, being the potential maximum number of shares in the second
table. The investment in Randgold shares will be held for sale and will
be fair valued at the effective date of the acquisition.
4
The �BMA after� column is based on the published unaudited financial
information of BMA for the six months ended 30 June 2008, adjusted for
the following:
*
Amounts have been converted from Australian Dollar to Rand at the following
assumed exchange rates:
- Income statement: R7.10: AUD1
- Balance sheet: R7.62: AUD1
*
Significant corporate action within BMA after 30 June 2008 but prior to the
implementation of the scheme. The corporate action includes the issue of
shares, the exercise of share options and a share consolidation of 20:1.
*
An accounting policy change relating to the expensing of exploration costs to
align the BMA accounting treatment with Aflease post the scheme.
*
The business combination as proposed in the scheme takes into consideration the
accounting principles relating to reverse acquisitions in terms of IFRS3
Revised: Business Combinations. It is assumed that BMA will elect to
early adopt IFRS3R: Business Combinations.
*
Transaction costs of R36.8 million, which are non-recurring. Costs
associated with the issue of shares of R7 million are set off against share
capital while other transaction costs are expensed in terms of IFRS3R: Business
Combinations. An interest impact after tax is assumed.
*
In terms of the scheme the convertible bonds in Aflease will be replaced with
convertible bonds in BMA with adjustments to certain terms and conditions to be
agreed with the convertible bondholders. A fair value adjustment of R90
million, based on preliminary calculations, is assumed, which increases the
carrying value of the liability and results in an equivalent charge to the
income statement. While fair value adjustments are accounted on an
ongoing basis, the nature of this charge to the income statement is
non-recurring as it relates directly to the replacement of the Aflease
convertible bonds. Fair value changes will be determined on the effective
date of the transaction.
*
Charges for IFRS2: Share-based payments are assumed to be the same as reported
and will have to be calculated as at reporting periods.
*
The issue of BMA shares in terms of the scheme. The number of shares at
30 June 2008 and the weighted average number of shares for the period then
ended are for the BMA legal entity after the scheme. Effectively one previous
share in Aflease per the �Aflease adjusted� column is equivalent to one BMA
share per the �BMA after� column.
5
The trading update for Aflease included in paragraph 1 of this announcement
refers to market movements after 30 June 2008 to date which have resulted in
the fair value of the convertible bonds liability reducing subsequent to the 30
June 2008 reporting date. While not a consequence of the scheme, the
current market movements are taken into consideration by the directors of
Aflease in their renegotiation of the terms for the replacement of the
convertible bonds. Preliminary valuations of the bonds indicate that,
currently, the R90 million fair value charge, as described in note 4 above, is
absorbed by the positive fair value adjustments arising as a consequence of the
current market conditions. The net impact of these adjustments on the
fair value of the convertible bond liability may therefore result in a
significantly different carrying value of the convertible bond liability at the
effective date of the scheme, compared to the liability assumed in the pro
forma financial effects. On the assumption that the market related fair
value adjustments to the convertible bonds result in a set-off of the R90
million impact of the renegotiation of the terms, the pro forma net asset value
per share would have been 43.80c to 48.58c and the pro forma earnings per
share would have been (10.34c)to (9.59c). Fair value changes will be
determined at the effective date of the transaction.
6
Diluted earnings per share are anti-dilutive.
4
Withdrawal of cautionary
Given
that the financial effects of the scheme have now been provided in paragraph 3
above, the cautionary relating to the scheme is withdrawn.
5
Ongoing cautionary
As
Aflease is still in discussions regarding transactions aimed at raising
development capital, the outcome of which may have a material effect on the
price of Aflease�s shares, Aflease shareholders are advised to continue to
exercise caution when dealing in Aflease�s shares until a further announcement
is made.
Parktown, Johannesburg
26 November 2008
Corporate
adviser and sponsor to Aflease: MACQUARIE FIRST SOUTH ADVISERS (PTY) LIMITED
****************
For further
information call Neal Froneman, CEO Aflease Gold on +27 (0)83 628 0226
Issued by du Plessis Associates on
behalf of Aflease Gold Limited.
dPA
contact Helen McKane Tel : +27 (0)11 728 4701, Mobile: +27 (0)82 330
2034 or e-mail: afleasegold@dpapr.com
www.afleasegold.com