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CASHBUILD LIMITED - INTRODUCTION OF BROAD-BASED BLACK ECONOMIC EMPOWERMENT IN CASHBUILD ("THE TRANSACTION") Cashbuild Limited (Incorporated in the Republic of South Africa) (Registration number 1986/001503/06) Share code: CSB ISIN: ZAE000028320 ("Cashbuild" or "the company") INTRODUCTION OF BROAD-BASED BLACK ECONOMIC EMPOWERMENT IN CASHBUILD ("THE TRANSACTION") 1. Introduction Cashbuild wishes to introduce a broad-based empowerment shareholder in line with the principles enshrined in the Broad-Based Black Economic Empowerment Act. Cashbuild will achieve this by introducing its employee base of approximately 2000 employees, of which more than 90% qualify as Historically Disadvantaged South Africans ("HDSA") as the broad-based black economic empowerment shareholder. 2. Rationale for the transaction Cashbuild wishes to embrace empowerment and believes that by embarking on the proposed transaction it is aligning the interests of employees and shareholders. This will enable Cashbuild to remain competitive and to preserve its leadership position as the largest retailer of building materials in Southern Africa. 3. Key terms of the transaction The transaction will be effected through the establishment of the Cashbuild Empowerment Trust ("the Trust") that will be funded by Cashbuild Management Services (Proprietary) Limited ("CMS"), a wholly-owned subsidiary of Cashbuild. CMS will advance up to R70 million to the Trust in order for the Trust to acquire up to 10% of the existing issued shares in Cashbuild. The loan to the Trust shall be non-interest bearing and should the Trust be terminated the loan will be repaid to CMS. There shall be up to five trustees in the Trust. The company"s employees shall always elect three trustees and Cashbuild, at its election, shall be entitled to appoint two trustees as professional advisors, provided that these appointees are not full time employees of the company. The chairman shall be one of the employee elected trustees. Each employee shall obtain a vested right in the net dividends received by the Trust. A distribution of the dividends received by the Trust (after the deduction of any administration costs of the Trust in respect of the relevant distribution period) shall be made when dividends are received by the trust. The distribution shall be made equally to all employees who were employees at the date of distribution of the relevant dividend. Upon the occurrence of the following events: * a change of control in the company following a successful takeover of the company; or * final liquidation of the Company, whether voluntary or compulsory; or * a disposal of the whole of the company"s business or a substantial part of its assets as contemplated in section 228 of the Companies Act; or * termination of the Trust for any reason the trustees will dispose of the Trust"s shareholding in Cashbuild. The proceeds received will first be applied to repay the outstanding loan to CMS and the net capital remaining will be distributed to employees. Participants have a right to acquire their pro-rata shares out of the Trust at any time at the average price at which the scheme shares are traded on the JSE Securities Exchange SA for the five trading days immediately preceding the date upon which the offer is made by the participants. The Trust will be reviewed after five years and every three years thereafter to ensure that it meets the relevant industry charter and company"s requirements. Any amendment to the Trust Deed will be subject to company, trustees and shareholder approval. 4. Conditions precedent The adoption of the transaction remains subject to approval by the Cashbuild shareholders at the annual general meeting to be held on Monday, 6 December 2004 at Cashbuild"s registered offices. 5. Financial effects The tables below set out the pro-forma financial effects, on a consolidated and not consolidated basis, of the transaction on the earnings per share ("EPS"), headline earnings per share ("HEPS"), net tangible asset value per share ("NTAV") and net asset value per share ("NAV") of the Company based on the audited financial results for the year ended 30 June 2004. This pro-forma financial information has been prepared for illustrative purposes only and because of its nature may not give a true picture of Cashbuild"s financial position and results of operations, nor the effect or impact of the transaction going forward. The preparation of the pro-forma financial information is the responsibility of the directors and in the opinion of PricewaterhouseCoopers Inc. the adjustments are appropriate for the purposes of the unaudited financial effects in terms of Section 8.30 of the JSE Listings Requirements. Consolidated Before After Percentage the the increase/ transaction transaction (decrease) (cents)(1) (cents)(4)
EPS 248.3 248.6(2) 0.1 HEPS 251.4 252.0(2) 0.2 NAV 725.0 485.3(3) (33.1) NTAV 688.1 440.8(3) (35.9) Notes (1) Extracted from the published financial results for the year ended 30 June 2004. (2) Based on the assumption that the transaction was implemented on 1 July 2003 and that 100% of the Cashbuild shares forming part of the scheme shares were purchased in the market at an average price of R30 per share. (3) Based on the assumption that the transaction was implemented on 30 June 2004. (4) The foregone notional interest on the loan made to the trust is at an after tax rate of 5.6%. If the trust were not consolidated, the pro forma financial effects of the transaction would appear as follows: Not Consolidated Before After Percentage the the increase/ transaction transaction (decrease)
(cents)(1) (cents)(4) EPS 248.3 230.1(2) (7.3) HEPS 251.4 233.2(2) (7.2) NAV 725.0 700.2(3) (3.4) NTAV 688.1 663.5(3) (3.6) 1 Extracted from the published financial results for the year ended 30 June 2004. 2 Based on the assumption that the transaction was implemented on 1 July 2003 and that 100% of the Cashbuild shares forming part of the scheme shares were purchased in the market at an average price of R30 per share. 3 Based on the assumption that the transaction was implemented on 30 June 2004. 4 The foregone notional interest on the loan made to the trust is at an after tax rate of 5.6%. Cashbuild"s auditors, PricewaterhouseCoopers Inc. have given their opinion that the Trust shall be consolidated in Cashbuild"s group annual financial statements. 6. Further details A circular, giving further details, will be posted together with the annual report, to shareholders on or about 12 November 2004. 7. Withdrawal of cautionary announcement Shareholders are referred to the cautionary announcement dated 3 November 2004, and are advised that caution is no longer required to be exercised by shareholders when dealing in their securities. Johannesburg 10 November 2004 Investment bank and sponsor Nedbank Capital Independent reporting accountants PricewaterhouseCoopers Inc. Corporate law advisers and consultants Van der Heever & Associates Date: 10/11/2004 05:07:01 PM Supplied by www.sharenet.co.za Produced by the JSE SENS Department
