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Announcement regarding a small related party agreement
SALUNGANO GROUP LIMITED
(previously known as Wescoal Holdings Limited)
Incorporated in the Republic of South Africa
(Registration number 2005/006913/06)
Share code: SLG
ISIN: ZAE000306890
(“Salungano” or “the Company”)
ANNOUNCEMENT REGARDING A SMALL RELATED PARTY AGREEMENT
1. Introduction
Shareholders are advised that the Company has renewed its lease agreement (“the
Lease Agreement”) with Simeka Investment Group Proprietary Limited (“Simeka
Investment Group”) in terms whereof the Company will continue to lease premises
located at Building 10, Salungano House, Woodmead Business Park, 142 Western
Service Road, Woodmead (“the Premises”) from Simeka Investment Group (“the Lease
Renewal”).
Simeka Investment Group is a related party to the Company due to the following:
• the chief executive officer and executive director of Salungano, Mr MR Ramaite, is
also a director of Simeka Investment Group and a trustee of a family trust that
indirectly holds shares in Simeka Investment Group; and
• Mr C Maswanganyi, a non-executive director of Salungano, is also a director of
Simeka Investment Group.
2. Rationale
The rationale for the Lease Agreement is to provide continuity to Salungano which has
been renting the Premises from Simeka Investment Group for more than five years.
3. Details of the Lease Renewal
In terms of the Lease Agreement, the Company rents the Premises from Simeka
Investment Group, including parking bays, for a period of 5 (five) years, commencing on
1 May 2023 and expiring on 30 April 2028, with an option to terminate the Lease
Agreement after 3 (three) years from the commencement date.
The Premises are utilised as the head office building by the Company and are fit for this
purpose.
Monthly lease payments which includes escalations of 7% per annum are set out in the
table below:
Period Monthly rental
(excluding VAT)
(R)
1 May 2023 to 30 April 2024 148 491.13
1 May 2024 to 30 April 2025 158 885.51
1 May 2025 to 30 April 2026 170 007.50
1 May 2026 to 30 April 2027 181 908.03
1 May 2027 to 30 April 2028 194 641.59
The Company, in its capacity as lessee, will also be liable for utilities, amounting to
approximately R25 600.00 per month.
4. Financial information
Salungano incurs lease expenses of the amounts set out in paragraph 3 above. The
rental payable is deductible for tax purposes. Except for the right of use asset to be
determined in terms of IFRS 16, there are no assets attributable to the Lease Renewal.
5. Categorisation and small related party transaction
In terms of paragraph 10.7 of the JSE Listings Requirements (“Listings Requirements”),
the Lease Agreement constitutes a “small related party transaction”. The board of
directors of the Company (“the Board”) is therefore required, pursuant to section 10.7(b)
of the Listings Requirements, to provide the JSE with written confirmation, from an
independent professional expert, that the terms and conditions of the Lease Agreement
are fair insofar as the Company’s shareholders are concerned.
Merchantec Capital Proprietary Limited was duly appointed as the independent expert
and has provided the Board with a fairness opinion with regard to the Lease Agreement
(“the Fairness Opinion”) in which they have advised the Board that the terms thereof are
fair to shareholders. The Fairness Opinion will lie open for inspection at the registered
office of the Company, located at 1st Floor, Building 10, Salungano House, Woodmead
Business Park, 142 Western Service Road, Woodmead, 2191, for a period of 28 days
from the date of this announcement, or may be obtained from Salungano’s Company
Secretary at yolande@salunganogroup.com on request.
8 February 2023
Corporate advisor and Sponsor
Nedbank Corporate and Investment Banking, a division of Nedbank Limited
Independent Expert
Merchantec Capital
Date: 08-02-2023 02:31:00
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