MVELAPHANDA GROUP LIMITED - Apportionment of cost for South Africa income tax purposes

Apportionment of cost for South Africa income tax purposes

Mvelaphanda Group Limited
Incorporated in the Republic of South Africa
Registration number: 1995/004153/06
Ordinary share code: MVG
ISIN code: ZAE000060737
(“Mvela Group” or “the Company”)


Apportionment of cost for South Africa income tax purposes in respect of the unbundling
of Mvela group’s interest in times media group limited (“TMG”)


Terms not defined in this announcement shall have the meanings given to them in the circular
posted to Mvela Group ordinary shareholders on 18 July 2012 ("the Circular").

1. Introduction
In the Circular and the finalisation announcement published on SENS on Friday, 7 September
2012, Mvela Group ordinary shareholders were informed, inter alia, of the unbundling by Mvela
Group of its entire shareholding in the issued share capital of TMG to Mvela Group ordinary
shareholders recorded in the Company’s register on the Unbundling Record Date, being the close
of business on Friday, 21 September 2012 (“the Unbundling”).

The Unbundling was effected in terms of section 46 of the Companies Act and section 46 of the
Income Tax Act on Tuesday, 25 September 2012, in the ratio of 9.9891 TMG shares for every
100 Mvela Group ordinary shares held on the Unbundling Record Date. The Unbundling was also
effected as a “dividend” as defined in section 1 of the Income Tax Act, solely out of TMG’s
reserves.

Mvela Group ordinary shareholders will have a combined expenditure ("Combined Expenditure")
in respect of the TMG ordinary shares received pursuant to the Unbundling ("Unbundled TMG
Ordinary Shares") and their Mvela Group ordinary shares in respect of which the Unbundled TMG
Shares were received ("Retained Mvela Group Ordinary Shares"). The Combined Expenditure
will be equal to the original expenditure incurred in respect of their Retained Mvela Group
Ordinary Shares, as contemplated in section 11(a), section 22(1) or section 22(2) of the Income
Tax Act for Retained Mvela Group Ordinary Shares held on trading account, and paragraph 20 of
the Eighth Schedule to the Income Tax Act for Retained Mvela Group Ordinary Shares held on
capital account.

The purpose of this announcement is to notify Mvela Group ordinary 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 TMG Ordinary Shares and the Retained
Mvela Group Ordinary Shares.

2. The Apportionment Ratio
The ratio of the respective market values of the Unbundled TMG Ordinary Shares and the
Retained Mvela Group Ordinary Shares on the JSE as at close of trade on Wednesday, 26
September 2012 was 40.66% relating to the Unbundled TMG Ordinary Shares and 59.34%
relating to the Retained Mvela Group Ordinary Shares ("Apportionment Ratio").

The Apportionment Ratio is to be used to apportion the Combined Expenditure between the
Unbundled TMG Ordinary Shares and the Retained Mvela Group Ordinary Shares for the
determination of profits and losses, of a capital or trading nature, to be derived on any future
disposals of the Unbundled TMG Ordinary Shares and/or the Retained Mvela Group Ordinary
Shares. Similarly, the Apportionment Ratio is also to be used to apportion the capital gains tax
valuation (where applicable) of the Retained Mvela Group Ordinary Shares, as contemplated in
paragraph 29 of the Eighth Schedule to the Income Tax Act, between the Unbundled TMG
Ordinary Shares and the Retained Mvela Group Ordinary Shares.

Also, in determining the base cost for the Unbundled TMG Ordinary Shares and the Retained
Mvela Group Ordinary Shares for capital gains tax purposes, Mvela Group ordinary shareholders
are deemed to have acquired both the Retained Mvela Group Ordinary Shares and the
Unbundled TMG Ordinary Shares on the dates on which the Retained Mvela Group Ordinary
Shares were originally acquired.

The potential South African taxation considerations for Mvela Group ordinary shareholders in
respect of the Unbundling are set out in Annexure 12 of the Circular. Mvela Group and its
advisors cannot be held responsible for the taxation consequences of the Unbundling. Should
Mvela Group ordinary shareholders have any queries regarding the taxation consequences of the
Unbundling, shareholders are advised to contact their respective tax advisors in this regard.

Melrose Arch

27 September 2012

Merchant bank                                  Legal adviser
Rand Merchant Bank, a division of First        Webber Wentzel
Rand Bank Limited
Promoter and arranger                          Sponsor
Blackstar Group Proprietary Limited            PSG Capital
Independent expert                             Reporting accountants
BDO Corporate Finance                          PKF (JHB) Inc.
Communications adviser
Brunswick South Africa Limited

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