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Specific repurchase of Cashbuild ordinary shares from the Cashbuild empowerment trust
Cashbuild Limited
(Incorporated in the Republic of South Africa)
(Registration number 1986/001503/06)
Share code: CSB ISIN: ZAE000028320
("Cashbuild" or "the Company")
SPECIFIC REPURCHASE OF CASHBUILD ORDINARY SHARES FROM THE CASHBUILD
EMPOWERMENT TRUST (“the Trust”)
1. Introduction and background
In 2005, Cashbuild implemented a Black Economic Empowerment (“BEE”) transaction, through
the introduction of all of its employees, of whom more than 90% qualified as historically
disadvantaged individuals (“Participants”) (“the Transaction”).
The Transaction was effected through the establishment of the Trust, with the Trust subscribing
for approximately 2.5 million shares representing 10% of the ordinary shares in Cashbuild at the
time (“Trust Shares”). The subscription for Trust Shares was funded by way of a non interest
bearing loan from Cashbuild Management Services (Proprietary) Limited (“CMS”), a wholly
owned subsidiary of Cashbuild. The loan provided by CMS was in the amount of R75 million,
and was used to subscribe for the Trust Shares at R29.09 per Trust Share. In terms of the trust
deed governing the Trust, the Trust would only be required to repay the R75 million loan to
CMS on termination of the Trust. The Trust was established in such a way that Participants do
not have direct access to the Trust Shares in their personal capacities, but only indirectly in
their capacities as beneficiaries of the Trust. The Participants are inter alia entitled to the receipt
of dividends flowing from the Trust Shares, provided they are Participants on the declaration
date(s) of such dividends. In respect of dividends, the Participants rank equally.
In 2010, given the significant increase in the ordinary share price of Cashbuild to that date,
there had been a substantial amount of value created in the Trust. The Company and the Trust
released a portion of this value to the Participants by entering into a repurchase agreement
dated 27 October 2010 (“the Repurchase Agreement”) in terms of which a specific repurchase
of 615 536 Trust Shares was implemented, which constituted an aggregate value of R50 million
(fifty million Rand). The proceeds of the specific repurchase were distributed to the Participants
in five quarterly payments which commenced on 15 February 2011.
The Trust currently holds 1 964 999 Trust Shares representing approximately 7.80% of the
ordinary shares in Cashbuild. Given the continued increase in the ordinary share price of
Cashbuild to date, there has been a substantial amount of additional value created in the Trust.
In light of this, the Company and the Trust are proposing releasing a further portion of this value
to the Participants by entering into a second repurchase agreement dated 14 October 2015
(“the Second Repurchase Agreement”) in terms of which a specific repurchase of 200 000 (two
hundred thousand) Trust Shares is proposed, which shall constitute an aggregate amount of
R61 890 000.00 (sixty one million eight hundred and ninety thousand rand), based on the 30
(thirty) day volume weighted average price, calculated on the date on which the Second
Repurchase Agreement was entered into (“the Specific Repurchase”). The proceeds of the
Specific Repurchase will be distributed to the Participants in one payment on or before the 28
February 2016.
2. The Specific Repurchase
Cashbuild will repurchase 200 000 (two hundred thousand) Trust Shares to the value of
R61 890 000.00 (sixty one million eight hundred and ninety thousand rand) from the Trust. The
consideration payable in respect of the Specific Repurchase will be R309.45 (three hundred
and nine rand and forty five cents) per repurchased Trust Share based on the 30 (thirty) day
volume weighted average price, calculated on 13 October 2015, being the date prior to the date
on which the Second Repurchase Agreement was entered into, being 14 October 2015. The
repurchased Trust Shares will be cancelled pursuant to the Specific Repurchase and will be
restored to the authorised but unissued ordinary shares of the Company.
3. Conditions precedent
The Specific Repurchase is subject to approval by way of special resolution passed by the
shareholders of Cashbuild.
4. Unaudited pro forma financial information
The table below sets out the unaudited pro forma financial effects of the Specific Repurchase
on Cashbuild’s earnings per share (“EPS”), headline earnings per share (“HEPS”), net asset
value per share (“NAV”) and net tangible asset value per share (“NTAV”). The unaudited pro
forma financial effects and the preparation thereof, which is the responsibility of the directors of
Cashbuild, has been prepared for illustrative purposes only, and because of its nature, may not
give a fair reflection of Cashbuild’s financial position and results of operations, nor the effect
and impact of the specific repurchase on Cashbuild going forward.
(1)
Before After the % Change
Specific
(2)
Repurchase
(3)
EPS (cents) 1 556.8 1 271.5 -18.3%
(3)
HEPS (cents) 1 528.2 1 243.0 -18.7%
(4)
NAV (cents) 5 924.9 5 647.3 -4.7%
(4)
NTAV (cents) 5 725.6 5 475.0 -4.8%
(5)
Weighted average number of shares (‘000) 23 055 23 055
(5)
Shares in issue (excl. Treasury shares) ('000) 22 656 22 656
Notes
1. Based on the published audited annual financial results of Cashbuild for the year ended
30 June 2015.
2. Represents the pro forma financial effects after the Specific Repurchase, which
has been accounted for in terms of IFRS2: Share Based Payment as a cash-
settled share-based payment.
3. EPS and HEPS effects are based on the following principal assumptions:
- the Specific Repurchase was effective on 1 July 2014;
- the Specific Repurchase of R61.89 million, including Dividend Withholding Tax
(“DWT”), is expensed as an employee cost, which is once-off in nature;
- transaction costs of approximately R1.0 million, which are once-off in nature; and
- Interest foregone on the Specific Repurchase and transaction costs at an
average rate of 6.35% pa before tax, which is recurring in nature.
4. NAV and TNAV per share effects are based on the following principal assumptions:
- the Specific Repurchase was effective on 30 June 2015;
- the Specific Repurchase of R61.89 million, including the resulting DWT, is settled
in cash from reserves; and
- transaction costs of approximately R1.0 million.
5. The Specific Repurchase has no impact on weighted average and number of shares in
issue due to the Trust being consolidated and shares held by the Trust being eliminated.
The number of shares in issue is net of 2,534,230 treasury shares.
5. Further details
A circular giving further detail will be included in the notice of annual general meeting, which
forms part of the integrated annual report, to be posted to shareholders on or about 2
November 2015. The annual general meeting is proposed to be held on Monday, 30 November
2015, at which meeting the resolutions proposed to give effect to the Specific Repurchase will
be proposed.
Johannesburg
16 October 2015
Investment bank and sponsor
Nedbank Corporate and Investment Bank
Corporate law advisers and consultants
Webber Wentzel Attorneys
Independent reporting accountants
PricewaterhouseCoopers Inc.
Date: 16/10/2015 03:36:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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