FOORD COMPASS LIMITED - Results Of General Meeting, Delisting Timetable And Withdrawal Of Cautionary

Results Of General Meeting, Delisting Timetable And Withdrawal Of Cautionary

FOORD COMPASS LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1987/003591/06)
ISIN: ZAE000054466
JSE code: FCPD
(“Foord Compass” or “the Company”)

RESULTS OF GENERAL MEETING, DELISTING TIMETABLE AND WITHDRAWAL OF CAUTIONARY

1. Result of General Meeting of Debenture Holders

At the request of debenture holders representing a majority of the issued Foord Compass Limited Variable Rate
Debentures (“Debentures”), the board of directors of the Company convened a general meeting of debenture holders
to consider, and if deemed fit, pass, a special resolution to redeem all the debentures for cash and to delist the
debentures.

The board of directors now advises that at the general meeting of debenture holders, held at 8 Forest Mews, Forest
Drive, Pinelands, yesterday, the special resolution voted on at the meeting was duly passed by the requisite majority of
votes.

The effect of the special resolution is that the Company will execute a cash redemption of all issued debentures in
accordance with Clause 8.2 of the Debenture Trust Deed dated 5 May 2009, at a net attributable asset value (“Cash
Redemption”), according to the timetable set out in paragraph 3 of this announcement.

2. Rationale for the Special Resolution

The Taxation Laws Amendment Act (“TLAA”) No. 31 of 2013 was promulgated on 12 December 2013. Sections 8F and
8FA of the amended Income Tax Act No 58 of 1962 will affect Foord Compass and therefore its investors after the
effective date of 1 April 2014:
-   Section 8F disallows the deduction by the company of interest paid to the holders of debt instruments that have no
    redemption date, and deems any distribution to those debenture holders to be a dividend, subject to dividends
    withholding tax at 15%; and
-   Section 8FA similarly disallows the deduction of interest paid where that interest is not determined with reference
    to a fixed or specified rate or the time value of money.

The application of the new sections introduced by National Treasury serves to increase the Company’s tax liability and
reduce the net returns achieved by debenture holders, most of whom are ultimately retirement funds that are
otherwise exempt from income and capital gains tax. Individual investors would also be liable for dividends withholding
tax on distributions.

The Debentures have played an important role in the savings industry over the past twelve years. Foord Compass is a
closed-end investment fund with a long-term, absolute return oriented objective, trying to achieve returns in excess of
CPI + 10% for investors over rolling five year periods.

Since the inception of the Debentures on 1 January 2002, investors have achieved net returns of 19.0% per annum after
costs, expenses and capital gains tax levied on the Company. For many investors, these returns have been exempt from
further tax. Over the period, inflation has averaged 5.8%. Accordingly, investors have received a real return of 
13.2% per annum. Returns of this order of magnitude provide a meaningful boost to retirement savings and the goal of a
retirement free from reliance on a state-sponsored pension.

For Foord Compass investors, the TLAA of 2013 will result in the after-tax returns to debenture holders falling
precipitously. The board’s view is that the vote by debenture holders was a vote against taxation on retirement savings.

3. Timetable

   Details                                                                                                      2014
   Last date to trade to be entitled to the Cash Redemption                                       Thursday, 20 March
   Trade suspended on the stock exchange operated by the JSE Limited (“JSE”)                        Monday, 24 March
   Date on which the net attributable asset value will be determined for purposes                Wednesday, 26 March
   of the Cash Redemption
   Announcement of the amount of the Cash Redemption on the Stock Exchange                          Friday, 28 March
            News Service of the JSE Limited on or before 9:00
   Record date                                                                                      Friday, 28 March
   Payment of Cash Redemption                                                                       Monday, 31 March
   Delisting from the JSE                                                                           Tuesday, 1 April

4. Withdrawal of cautionary announcement

Debenture holders are referred to the cautionary announcement dated 20 January 2014 and are advised that, as a
result of the approval of the Cash Redemption, caution is no longer required to be exercised by debenture holders
when dealing in their Debentures.

BY ORDER OF THE BOARD
L Grevler
Secretary

Cape Town
26 February 2014

Sponsor
One Capital

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