General SENS Submitter Company - GEN General Trustco Group Holdings Limited

GEN – General – Trustco Group Holdings Limited

GEN – General – Trustco Group Holdings Limited

Update in the JSE’s decision on its proactive monitoring review for Trustco Group Holdings Limited
(“Company” or “Trustco”) financial results.

We refer to the JSE’s SENS announcement of 11 November 2020 which informed stakeholders of the
process followed and the decisions made by the JSE in respect of the Company as it relates to their Annual
Financial Statements for the year ended 31 March 2019 and interim results for the 6 months ended 30
September 2019 and the JSE’s views and decision that Trustco’s financial information does not comply
with the JSE’s Listings Requirements.

Trustco released a SENS announcement on 13 November 2020 indicating that it would exercise its right
to appeal to the Financial Services Tribunal (“the Tribunal”) for a reconsideration of the JSE’s decisions in
terms of the Financial Sector Regulation Act.

The hearing before the Tribunal was held on 2 November 2021. The Tribunal’s decision was made on 22
November 2021:

            1. Trustco’s application for reconsideration is dismissed.
            2. Trustco’s repeated failure to take the FRIP, the JSE and the Tribunal into its confidence by
                  explaining Dr. Van Rooyen’s waivers of the loans amounts to exceptional circumstances
                  which warrants an order that Trustco pays 50% of the JSE’s costs.

In these circumstances the JSE decision that the Company had not complied with IFRS in respect of the
three matters referred to in 1 – 2 below has been confirmed by the Tribunal:

 1.   The classification of the ‘gain’ recognised in profit and loss by Trustco, following two separate loan
      waivers by the majority shareholder of the Company (Dr Quintin van Rooyen; also previous 100%
      shareholder of Huso Investments (Pty) Ltd an acquired subsidiary of Trustco). Trustco accounted
      for the loan waivers by recognising in profit and loss:
         1.1.1.     a N$546m gain in the March 2019 AFS;
         1.1.2.     a N$1bn gain in the interim results for the 6 months ended September 2019 as well as
                    the subsequent interim results for the 12 months ended March 2019;
 2.   The appropriateness under IFRS of re-classifying unsold erven held by Trustco in a property
      development from inventory to investment property. The reclassification triggered a N$693m gain,
      which was presented as Revenue of N$984m and cost of sales of N$291m in the profit and loss
      account in the Company’s 2019 AFS; and



The corrective action which the Company is required to implement remains as follows:



      A. Restating the Company’s Annual Financial Statements for the year ended 31 March 2019 to
      account for the following prior period errors:

       1. Reversing the N$546m gain previously recognised in profit and loss and recognising this ‘credit
           amount’ to reduce the common control reserve initially recognised in equity as a result of the
           Huso acquisition (referral 1);
       2. Reversing the reclassification of the Elisenheim properties (incorrectly reclassified to
           investment properties) and consequently reversing the N$693m gain (presented as revenue of
           N$984m and cost of sales of N$291m) from profit and loss (referral 2); and
      B. Restating the Company’s interim results for the 6 months ended 31 September 2019 to account
         for the following prior period error:
       3. Reversing the N$1bn gain previously recognised in profit and loss and accounting for this as a
           transaction with an equity participant i.e. recognising the credit directly in equity (referral 1).



      The restatement in both the Annual Financial Statements and interims results must be effected in
      accordance with IAS 8, and in particular paragraphs 42 and 49 thereof.


22 November 2021

Date: 22-11-2021 12:53:00
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