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CAE
CAE
CAE - Cape Empowerment Trust Limited - Financial effects of disposal and
withdrawal of cautionary
Cape Empowerment Trust Limited
(Incorporated in the Republic of South Africa)
(Registration number 1998/014606/06)
("CET" or "the company")
Share Code: CAE
ISIN: ZAE000016952
FINANCIAL EFFECTS OF DISPOSAL OF INTERESTS IN FIVE PROPERTIES TO AMBIT
PROPERTIES LIMITED
WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT
1 Introduction
Shareholders are referred to the detailed cautionary announcement dated 11 June
2007 in which shareholders were advised that CET, which is a 25% limited partner
in a series of five en commandite partnerships, collectively known as African
Alliance, each of which owns or has an interest in an office building, had
entered into an agreement with Ambit Properties Limited ("Ambit") to dispose of
its undivided share in each of the five office buildings for a consideration of
R 364 197 623 ("the disposal") to be discharged by way of the issue of linked
units in Ambit at a price of R3.70 per unit. As part of the transaction CET will
prior to disposal of the properties, discharge the approximately R322 million
worth of debt over the properties, and CET will raise bank funding in order to
do so.
2. Financial information
The financial effects of the disposal on CET`s earnings, headline earnings, net
asset value and tangible net asset value per share are set out below. This
information has been prepared for illustrative purposes only and because of its
nature, may not fairly present CET`s financial position, or give a fair
reflection of the effect of the disposal on a CET shareholder. The financial
information has not been reviewed or reported on by the reporting accountants
and is the responsibility of the directors.
Before After % After %
equity change effect of change
accounting market
transaction value
value adjustment
Earnings per share 44.6 56.2 25.9% 84.9 90.2%
(cents)
Fully diluted 42.6 53.6 25.8% 81.0 90.0%
earnings per share
(cents)
Headline earnings 43.8 55.3 26.3% 84.0 91.8%
per share
(cents)
Fully diluted 41.7 52.8 26.5% 80.1 92.1%
headline earnings
per
share (cents)
Net asset value 98.0 107.5 9.8% 131.2 34.0%
per share (cents)
Tangible net asset 83.8 93.4 11.4% 117.1 39.7%
value
per share (cents)
Number of shares in 231 072 231 072 231 072
issue
(`000)
Weighted shares in 190 869 190 869 190 869
issue
(`000)
Diluted shares in 200 193 200 193 200 193
issue
(`000)
1 The figures in the "before" column are extracted from the reviewed
financial results of CET for the year ended 31 December 2006.
2 The "after" columns assume that the transactions occurred on 1 January
2006 for earnings purposes (pro forma consolidated Income Statement)
and on 31 December 2006 for NAV purposes (pro forma consolidated
Balance Sheet).
3 The transaction reflects an effective yield of 9.0% on the portfolio,
and a price of R3,70 per Ambit linked unit.
4 The effective yield on the portfolio has been discounted at 8% per
annum for 18 months in imputing the earnings that would have been
earned on the portfolio for the 12 months including 31 December 2006.
5 As the effect of this transaction is that Ambit will be an associate
of the company, the first adjustment column reflects the impact on the
company of equity accounting Ambit`s results as adjusted for the
inclusion of the portfolio in Ambit`s results. In making this
adjustment, the portfolio has been included at transaction value and
has not been discounted to 1 January 2006.
6 The interest rate used for borrowings was per agreed terms of 10,5%
per annum.
7 Income from investments was calculated per the distribution declared
by Ambit on 31 March 2006 and on 30 September 2006 and was adjusted by
the imputed earnings referred to in note 4.
8 A head lease commitment amounting to R24 million has been made by
African Alliance to Ambit in respect of one of the properties. No
provision has been made for CET`s obligation (R6 million) in this
regard as African Alliance holds a "back-to-back" headlease from a
third party to cover the head lease commitment.
9 The unit holding in Ambit at market value has been valued at a price
of R4.70.
10 African Alliance has an obligation to meet capital expenditure
amounting to R18,5 million in respect of one of the properties. CET`s
portion of this obligation, amounting to R4.63 million has been taken
into account in determining the profit on the transaction.
11 Valuation of the management company was made on projected earnings at
a price/earnings ratio of 7 times.
12 No transaction costs have been included in the above pro forma
information.
13. Any transactions other than those referred to in notes 1 - 12 above
that have taken place after 31 December 2006 have not been taken into
account in these financial effects.
3 Withdrawal of cautionary
With reference to the above financial information CET shareholders are informed
that they need no longer exercise caution when dealing in the shares of CET.
Cape Town
25 June 2007
Corporate Advisor and Sponsor
Sasfin Capital
A division of Sasfin Bank Limited
Attorneys
Hofmeyr Herbstein Gihwala Incorporated
Date: 27/06/2007 13:03:01 Produced by the JSE SENS Department.
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