To view the PDF file, sign up for a MySharenet subscription.

CND - Conduit Capital Limited - Disposal Of Gateway Capital Limited

Release Date: 18/09/2008 12:33
Code(s): CND
Wrap Text

CND - Conduit Capital Limited - Disposal Of Gateway Capital Limited Conduit Capital Limited Incorporated in the Republic of South Africa (Registration number 1998/017351/06) Share code: CND ISIN: ZAE000073128 ("Conduit Capital" or "the group") DISPOSAL OF GATEWAY CAPITAL LIMITED Shareholders are advised that Conduit Capital has disposed of its 50.05% interest in Gateway Capital Limited ("Gateway") to KSO Financial Services (Proprietary) Limited ("KSO") with effect from 31 July 2008 (the "disposal"). Gateway is an innovator in the short-term commercial bridging finance industry, offering specialised commercial, asset and property finance. RATIONALE Conduit Capital is of the view that the disposal of its interest in Gateway is beneficial to the group and its shareholders. While the prospects of Gateway remain good, Gateway`s business is impacted by the current high interest rate environment, which dictates that in order for it to develop and expand its business it would have to pursue an aggressive growth strategy. Although consistent with the industry in which Gateway operates, this direction would not be aligned with Conduit Capital`s more conservative risk strategy. In the circumstances and following discussions with management, it was deemed appropriate for Conduit Capital to exit its stake. TERMS AND CONDITIONS OF THE DISPOSAL Conduit Capital has sold its shares in Gateway to KSO for an aggregate consideration of R16 400 000, of which: - R2 900 000 (together with interest at prime plus 2% from 31 August 2008 until the date of payment) will be paid in cash by 10 October 2008; and - the balance of R13 500 000 will be discharged by the cession by KSO to Conduit Capital of its loan account against Gateway (the "KSO loan"). The KSO loan bears interest at prime plus 2% and is repayable as follows: - R5 000 000 by no later than 31 December 2008; - R5 000 000 by no later than 28 February 2009; and - the balance by no later than 31 August 2009. The proceeeds from the disposal will be appropriately utilised within the group. The disposal is not subject to any conditions precedent. FINANCIAL EFFECTS OF THE DISPOSAL The table below sets out the unaudited pro forma financial effects of the disposal on Conduit Capital`s earnings per share ("EPS"), headline earnings per share ("HEPS"), diluted earnings per share ("DEPS"), diluted headline earnings per share ("DHEPS"), net asset value ("NAV") per share and tangible net asset value ("TNAV") per share. The unaudited pro forma financial effects have been prepared to illustrate the impact of the disposal on the reported financial information of Conduit Capital for the six months ended 29 February 2008, had the disposal occurred on 1 September 2007 for income statement purposes and on 29 February 2008 for balance sheet purposes. The pro forma financial effects have been prepared using accounting policies that comply with International Financial Reporting Standards and that are consistent with those applied in the results for the six months ended 29 February 2008 as well as in preparing the annual financial statements of Conduit Capital for the 18 months ended 31 August 2007. The unaudited pro forma financial effects, which are the responsibility of the directors, are provided for illustrative purposes only and, because of their pro forma nature, may not fairly present Conduit Capital`s financial position, changes in equity, results of operations or cash flow. Before After disposal disposal Change
(cents) (cents) (%) EPS 1.20 1.52 26.7 HEPS 1.20 1.36 13.3 DEPS 1.08 1.37 26.9 DHEPS 1.08 1.23 13.9 NAV per share 89.85 90.00 0.2 TNAV per share 54.72 67.72 23.8 Number of shares in issue net 226 277 226 277 of treasury shares (`000) Weighted average number of shares (`000) 225 856 225 856 Fully diluted number of 250 954 250 954 shares in issue (`000) Notes and assumptions: The figures set out in the "Before disposal" column above have been extracted from the unaudited interim results for the six months ended 29 February 2008. The disposal is assumed to have been implemented on 1 September 2007 for EPS, HEPS, DEPS and DHEPS purposes and on 29 February 2008 for NAV and TNAV per share purposes. EPS and HEPS as set out in the "After disposal" column are based on the unaudited income statement for the six months ended 29 February 2008 and on the assumptions that: - KSO paid R2 900 000 of the sale consideration by 10 October 2007 and two amounts of R5 000 000 each on 31 December 2007 and on 29 February 2008, respectively; - amounts owing by KSO accrued interest at prime plus 2%, which translated to pre-tax interest rates of between 15,5% and 16,5%; - cash received from KSO was invested in a call account that earned interest at pre-tax rates of between 9,2% and 10,0% per year; and - transaction costs of R50 000 were incurred. - DEPS and DHEPS as set out in the "After disposal" column are based on the unaudited income statement for the six months ended 29 February 2008 and on the assumptions that: - KSO paid R2 900 000 of the sale consideration by 10 October 2007 and two amounts of R5 000 000 each on 31 December 2007 and on 29 February 2008, respectively; - amounts owing by KSO accrued interest at prime plus 2%, which translated to pre-tax interest rates of between 15,5% and 16,5%; - cash received from KSO was invested in a call account that earned interest at pre-tax rates of between 9,2% and 10,0% per year; and - transaction costs of R50 000 were incurred. - All adjustments have a continuing effect. CATEGORISATION OF THE DISPOSAL The disposal is a category 2 transaction in terms of section 9.5(a) of the Listings Requirements of JSE Limited. 18 September 2008 Sponsor Merchant Sponsors (Proprietary) Limited Corporate advisor Java Capital (Proprietary) Limited Date: 18/09/2008 12:33:01 Supplied by www.sharenet.co.za Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited (`JSE`). The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct, indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on, information disseminated through SENS.

Share This Story