Select records E261m profit

MBABANE - Select Ltd realised a profit of E261 million.

Select Ltd, in turn, utilised the profit realised to declare a dividend of E261 million to its shareholder, SBC Ltd.

The dividend receivable was utilised to partially offset (91 per cent) against the purchase price of E286 million, leaving a small balance of E25 million of the purchase consideration owed to Select Ltd by SBC Ltd. The net financial position of Select Ltd remained unchanged as the full profit generated from the sale of its investment in Lesana, was declared as a dividend to SBC Ltd. SBC’s net financial position in turn increased by E261 million post-transactions, as a result of the dividend received from Select Ltd.

Worth mentioning is that SBC Limited owns 99.99 per cent of Select Ltd, which historically wholly owned by Lesana Lesotho. The value of Select Ltd’s investment in Lesana was held at a cost of E25 million. During the period under review, management has identified an opportunity to realise the underlying fair value of Lesana on the SBC Statement of Financial Position, and therefore, presented a proposal whereby SBC Ltd acquires Lesana Ltd from Select Ltd at fair value.

Valuation

As part of the due diligence on the transaction, Management engaged BDO SA to do an expert independent valuation. Based on the valuation report, the median value of the company was deemed at E436 million, including a shareholder inter-company loan of E150 million.

As the proposed transaction excludes the shareholder loan receivable from Lesana to Select Ltd, the proposed selling price of Lesana was set at E286 million. This commercial transaction was approved by the various Boards of SBC Ltd, Select Ltd and Lesotho Ltd, effective on June 30, 2023.