JSE LIMITED - GEN - Apportionment of cost for taxation and/or capital gains tax in respect of the unbundling of shares in AF Group

GEN - Apportionment of cost for taxation and/or capital gains tax in respect of the unbundling of shares in AF Group

Alexander Forbes Preference Share Investments Limited
(Incorporated in the Republic of South Africa)
Registration number 2006/031561/06
Share code: AFP
ISIN: ZAE000188942
(“AF Pref” or “the Company”)

APPORTIONMENT OF COST FOR TAXATION AND/OR CAPITAL GAINS TAX PURPOSES IN
RESPECT OF THE UNBUNDLING BY AF PREF OF ITS 355,178,339 ORDINARY SHARES IN
ALEXANDER FORBES GROUP HOLDINGS LIMITED

    1. Introduction

       Holders of AF Pref preference shares ("preference shareholders") are referred to the circular
       dated 4 August 2014 and the finalisation announcement released on the Stock Exchange News
       Service (“SENS”) on 5 September 2014 regarding the unbundling by AF Pref of its 355,178,339
       ordinary shares in Alexander Forbes Group Holdings Limited ("Alexander Forbes") to preference
       shareholders.

       On Monday, 22 September 2014, AF Pref unbundled and distributed, in compliance with section
       112 of the Companies Act, 1973 and in terms of section 46 of the Income Tax Act, 1962
       ("Income Tax Act"), 355,178,339 Alexander Forbes ordinary shares ("Alexander Forbes shares")
       to preference shareholders recorded as such in the shareholders register of AF Pref on Friday,
       19 September 2014 ("record date") such that each preference shareholder received 1.09485
       Alexander Forbes shares for every 1 (one) AF Pref preference share held on the record date (the
       "unbundling").

       Preference shareholders will have a combined expenditure ("combined expenditure") in respect
       of their AF Pref preference shares (“preference shares”) and the Alexander Forbes shares
       received pursuant to the unbundling. For AF Pref preference shares held on trading account, the
       combined expenditure will be equal to the expenditure incurred in respect of such AF Pref
       preference shares, as contemplated in section 11(a), section 22(1) or section 22(2) of the Income
       Tax Act. For AF Pref preference shares held on capital account, the combined expenditure will
       be equal to the expenditure incurred in respect of such AF Pref preference shares, as
       contemplated in paragraph 20 of the Eighth Schedule to the Income Tax Act.

       The purpose of this announcement is to notify preference shareholders of the apportionment
       ratio to be applied to the combined expenditure in determining the portion of the combined
       expenditure to be allocated to the unbundled Alexander Forbes shares and the AF Pref
       preference shares.

    2. The apportionment ratio

       The ratio of the market value of an AF Pref preference share held after the unbundling (i.e. the
       redemption value of R0.07491 per AF Pref preference share) to the market value of the
       unbundled Alexander Forbes shares in respect of each AF Pref preference share on the JSE as
       at close of trade on Monday, 22 September 2014 was 0.80604% relating to an AF Pref
       preference share held after the unbundling and 99.19396% relating to the 1.09485 unbundled
       Alexander Forbes shares ("apportionment ratio").

       The apportionment ratio is to be used to apportion the combined expenditure between the
       unbundled Alexander Forbes shares and the AF Pref preference shares for the determination of
       profits and losses, of a capital or trading nature, to be derived on any future disposals of the
       unbundled Alexander Forbes shares and the proceeds from the redemption of the AF Pref
       preference shares. Similarly, the apportionment ratio is also to be used to apportion the capital
       gains tax valuation (where applicable) of the AF Pref preference shares, as contemplated in
       paragraph 29 of the Eighth Schedule to the Income Tax Act, between the unbundled Alexander
       Forbes shares and the AF Pref preference shares.

       In determining the base cost for the unbundled Alexander Forbes shares and the AF Pref
       preference shares for capital gains tax purposes, preference shareholders are deemed to have
       acquired both the AF Pref preference shares and the unbundled Alexander Forbes shares on the
       dates on which the AF Pref preference shares were originally acquired.

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

Johannesburg
23 September 2014

Financial adviser and sponsor to AF Pref
Rand Merchant Bank (A division of FirstRand Bank Limited)

Legal advisers to AF Pref
Bowman Gilfillan Inc.




 

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