SEARDEL INVESTMENT CORPORATION LTD - Apportionment: Tax cost for South African tax purposes in respect of the unbundling of Seardel's interest in Deneb

Apportionment: Tax cost for South African tax purposes in respect of the unbundling of Seardel's interest in Deneb

SEARDEL INVESTMENT CORPORATION LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1968/011249/06)
Share code: SER          ISIN Code:    ZAE000029815
Share code: SRN          ISIN Code:    ZAE000030144
(“Seardel” or “the Company” or “the Group”)

APPORTIONMENT OF TAX COST FOR SOUTH AFRICAN INCOME TAX
PURPOSES IN RESPECT OF THE UNBUNDLING OF SEARDEL’S INTERESTS
IN DENEB INVESTMENTS LIMITED (“Deneb”)

1.   Introduction

     Shareholders are referred to the SENS announcement of
     Friday, 14 November 2014 (“the SENS Announcement”),
     relating to the unbundling by Seardel of 100% of the
     issued share capital of Deneb (“Unbundling”), to its
     ordinary and N-class shareholders in the ratio of 12.91952
     (twelve comma nine one nine five two) Deneb shares for
     every   100  shares   held   in  Seardel   on  Friday,   5
     December 2014 (“Unbundling Record Date”), rounded to the
     nearest whole number.

     Shareholders are hereby advised that the Unbundling was
     implemented in terms of section 46 of the Companies Act,
     No 71 of 2008 and section 46 of the Income Tax Act, No 58
     of 1962 (“Income Tax Act”).

     The purpose of this announcement is to notify shareholders
     of the apportionment ratio to be applied by shareholders
     in determining the portion of their past costs (and market
     value, if relevant) to be allocated to the unbundled Deneb
     shares and the retained Seardel shares.

2.   Apportionment tax principles

     Shareholders are referred to the SENS Announcement where
     the tax implications for shareholders of the Unbundling
     were explained in more detail.

     As   indicated   in   the   SENS  Announcement,  Seardel
     shareholders will have a combined expenditure in respect
     of the Seardel shares and the Deneb shares received
     pursuant to the Unbundling.

     Seardel shares held as trading stock:

     Any Seardel shareholder holding Seardel shares as trading
     stock will be deemed to acquire the unbundled Deneb Shares
     as trading stock. The combined expenditure of such Seardel
     and Deneb shares will be the amount taken into account by
     the shareholder in respect of those Seardel shares for the
     purposes of section 11(a), section 22(1), or section 22(2)
     of the Income Tax Act. The portion of the above combined
     expenditure to be allocated to the unbundled Deneb Shares,
     will be determined by applying the ratio that the market
     value of the Deneb Shares, as at the end of the day of the
     Unbundling, being Monday, 1 December 2014, bears to the
     sum of the market value of Seardel and Deneb shares as at
     the end of that day. The expenditure allocated to the
     unbundled Deneb Shares will reduce the expenditure of the
     Seardel shares held.

     Seardel shares held as capital assets:

     Any Seardel shareholder holding Seardel shares as capital
     assets will be deemed to acquire the unbundled Deneb
     Shares as capital assets. The combined expenditure of such
     Seardel and Deneb shares will be the expenditure incurred
     in respect of the Seardel shares prior to the Unbundling
     that is allowable in terms of paragraph 20 of the Eighth
     Schedule to the Income Tax Act. Market value in relation
     to Seardel shares acquired before 1 October 2001 means the
     market value adopted or determined by the shareholder in
     respect of those shares within the period contemplated in
     paragraph 29(4) of the Eighth Schedule to the Income Tax
     Act. The portion of the above combined expenditure and
     market value to be allocated to the unbundled Deneb Shares
     will be determined by applying the ratio that the market
     value of Deneb Shares, as at the end of the day of the
     Unbundling, being Monday, 1 December 2014, bears to the
     sum of the market value of Seardel and Deneb shares at the
     end of that day. The expenditure and market value
     allocated to the unbundled Deneb Shares will reduce the
     expenditure and market value of the Seardel shares held.

     Seardel shareholders are advised to consult their own
     professional tax advisors should they have any queries
     regarding the taxation consequences of the Unbundling and
     the calculation of their costs for taxation purposes.

3.   Apportionment ratio

     Shareholders are hereby advised that the expenditure and
     market value of their Seardel ordinary shares as referred
     to above must be apportioned in the ratio of 79.05039% to
     the Seardel ordinary shares held after the Unbundling and
     20.94961% to the unbundled Deneb shares (“Apportionment
     Ratio 1”). Shareholders are hereby further advised that
     the expenditure and market value of their Seardel N-class
     ordinary shares as referred to above must be apportioned
     in the ratio of 76.14983% to the Seardel N-class ordinary
     shares held after the Unbundling and 23.85017% to the
     unbundled   Deneb   shares   (“Apportionment  Ratio   2”)
     Apportionment Ratio 1 and Apportionment Ratio 2 are based
     on the closing price of R1.95 per Seardel ordinary share,
     R1.65 per Seardel N-class ordinary share and R4.00 per
     Deneb share on Monday, 1 December 2014, the date of the
     Unbundling.

Cape Town
2 December 2014

Transaction Adviser and Sponsor to Deneb
PSG Capital

Sponsor to Seardel
Investec Bank Limited

Date: 02/12/2014 03:04:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). 
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