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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") ("Specific Repurchase")

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"), as indirect shareholders of Cashbuild ("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 and amendments to the Trust are subject to the following conditions precedent:

    - shareholder approval; and
    -the registration of the special resolution authorising the Specific Repurchase by the Registrar of Companies.

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.

 

Before (1)

After the Specific Repurchase(2)

% Change

EPS (cents)(3)

1 556.8

1 271.5

-18.3%

HEPS (cents)(3)

1 528.2

1 243.0

-18.7%

NAV (cents)(4)

5 924.9

5 647.3

-4.7%

NTAV (cents)(4)

5 725.6

5 475.0

-4.8%

Weighted average number of shares (‘000)(5)

23 055

23 055

 

Shares in issue (excl. Treasury shares) ('000)(5)

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 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.



Year end Results

Audited Annual Results and Dividend Declaration June 2015
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Building something special

Masslift Africa recently delivered its 100th Mitsubishi Grendia forklift to Cashbuild. This was an especially proud moment for the staff and management of Masslift. Cashbuild is a South African company, who believe in delivering quality products at reasonable pricing; a principle that Masslift and Mitsubishi forklifts identify with and try to emulate in their own business.

To mark the occasion, Masslift had the forklift painted in the Cashbuild corporate colours and offered Cashbuild a year's worth of maintenance at no cost. This was as a token of appreciation for the support that Cashbuild has provided to Masslift over the last few years, naming Masslift its preferred supplier and putting Mitsubishi Grendia forklifts in 100 stores all over Southern Africa.

”I think it was the fuel saving that we offer that initially got Cashbuild interested. But I would like to believe that, almost 3 years down the line, it is the relationship that we have built, based on good service, transparency and consistent communication that has cemented us as a Cashbuild supplier” says Marco Caverni, Sales Director of Masslift Africa.

”We are always searching for ways to reduce our costs while improving our efficiencies. The Mitsubishi Forklift provides Cashbuild with a major fuel saving, extended service intervals and a 3 year / 5000 hour warranty. This coupled with Masslift's service culture means our partnership has really added value to Cashbuild” says Etienne Prowse, Financial Director of Cashbuild.




CASHBUILD LIMITED
(Registration number: 1986/001503/06)
(Incorporated in the Republic of South Africa)
JSE share code: CSB ISIN: ZAE000028320
(”Cashbuild” or ”the company”)

Announcement regarding the acquisition of P and L Hardware (Proprietary) Limited

1. Introduction

Cashbuild shareholders are advised that the Company has entered into an agreement for the acquisition of 100% of the shareholding in P and L Hardware (Proprietary) Limited (”P&L”) (the ”Acquisition”).

The effective date of the Acquisition will be 5 business days following the date on which all conditions precedent have been met, which is anticipated to be by end of November 2015.

2. Rationale for the Acquisition

In line with Cashbuild‘s strategy for growing the business, the Acquisition will expand Cashbuild‘s footprint and market share. Through the Acquisition Cashbuild will enhance its position in the market as well as aspiration of bringing quality building materials at the lowest prices to the communities in which it trades.

3. Description of P&L

P&L comprises 39 retail building material and hardware outlets situated predominantly in the Limpopo and Mpumalanga provinces of South Africa.

4. Purchase consideration

The purchase consideration is the sum of R350,000,000 payable upon fulfilment of conditions precedent (set out in paragraph 5 below), plus additional amounts totalling up to R80,000,000, if certain profits targets are achieved by P&L during a three year measured payment period. The additional amounts will be payable in annual instalments over the three years based on achievement against profit targets.

The purchase consideration will be funded from Cashbuild‘s existing cash resources.

5. Conditions precedent

The finalisation of the Acquisition is subject to the following conditions precedent:

  • regulatory approvals, as may be required including the South African Competition Authorities;
  • completion of due diligence investigations; and
  • concluding management and restraint agreements with key management of P&L, as soon as is practically possible.

6. Value of net assets and profit attributable to the Acquisition

The value of the net assets that are the subject of the Acquisition is R117,900,000 and the profit attributable to the net assets that are the subject of the Acquisition is R35,800,000.

7. Categorisation of the Acquisition

The Acquisition is categorised as a Category 2 transaction in terms of the JSE Listings Requirements and accordingly does not require shareholder approval.

6 August 2015

Sponsor
Nedbank CIB
www.cashbuild.co.za
www.pandl.co.za
 
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