Pursuant to an ELB board decision to restructure an ELB Executive Bonus Scheme and having obtained approval from the requisite number of executive participants, the ELB Participants Share Trust has, as allowed by the ELB Participants Share Trust Deed, agreed to transfer the 6 772 000 ELB ordinary shares held by it to ELB Timber Holdings (Pty) Ltd ("ELB Timber") and The ELB Share Incentive Trust ("The Incentive Trust"). ELB Timber is a wholly owned subsidiary of ELB and will receive 50 per cent of these shares, namely, 3 386 000 ELB ordinary shares which in turn is 10 per cent of the current issued share capital of ELB. These shares will continue to be treated as treasury shares.
The Incentive Trust will receive the other 50 per cent, namely, 3 386 000 ELB ordinary shares to cover its obligations in respect of the options already granted in terms of the ELB Share Incentive Schemes. Having agreed to the transfer of the 6 772 000 ELB ordinary shares the executive participants will no longer receive the ELB dividends paid on such shares. The executive participants will however in future receive a pre tax cash bonus based on the dividends paid each year on the equivalent 6 772 000 ELB ordinary shares. This ensures that the executive participants will be rewarded at the same time as ELB Shareholders receive dividends continuing to align the interests of executive participants and the ELB shareholders.
The result of the restructure of the bonus schemes alone is that both the equity attributable to ordinary shareholders in the ELB consolidated balance sheet and group earnings per ordinary share will be materially the same as before the transactions. However following the transfer of shares a once off CGT charge of R5.1 million will arise and as a consequence there will be a once off reduction in group net asset value of approximately 20.6 cents per ELB ordinary share for the year ended 30 June 2011.