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Management Agreement Entered Into Between Trustco Group Holdings Limited (“Trustco”) & Next Capital Limited (“Next")
TRUSTCO GROUP HOLDINGS LIMITED
Incorporated in the Republic of Namibia
(Registration number 2003/058)
Registered as an external company in South Africa
(External registration number 2009/002634/10)
NSX share code: TUC
JSE share code: TTO
OTCQX share code: TSCHY
ISIN Number: NA000A0RF067
(“Trustco” or “the Group”)
MANAGEMENT AGREEMENT ENTERED INTO BETWEEN TRUSTCO GROUP HOLDINGS LIMITED
(“Trustco”) AND NEXT CAPITAL LIMITED (“Next”)
Shareholders are advised that Trustco and Next have entered into an agreement ("Management
Agreement") in terms of which Next has been appointed to provide the management services to
Trustco as set out below, for which Next shall earn a fee from Trustco for the provision of such services
(“Management Fee”).
1. DESCRIPTION OF THE BUSINESS CONDUCTED BY NEXT CAPITAL
Next is the investment entity of Dr Quinton van Rooyen, who is the Chief Executive Officer /
Managing Director of Trustco and majority shareholder. Dr Quinton van Rooyen is a director
and the majority shareholder of Next.
Next, as the investment entity, invests in property, shares, securities and/or equities of any kind
and is also a shareholder in Trustco.
2. RATIONALE FOR THE AGREEMENT
Trustco was managed through a management agreement since 1 April 2011 which expired 31
March 2021. This management agreement is earmarked to align management performance
with shareholders expectations.
3. SUSPENSIVE CONDITIONS
The Management Agreement shall be conditional upon the obtaining of the respective board
and shareholders’ approvals (“Suspensive Conditions”).
The closing date of the Transaction shall be the date that all Suspensive Conditions have been
fulfilled and the Management Agreement may be implemented (“Closing Date”).
4. SALIENT TERMS OF THE MANAGEMENT AGREEMENTS
The salient terms of the Management Agreement are set out below:
4.1 Effective Date and Term
The effective date of the Management Agreement shall be 1 April 2021 irrespective of the
Closing Date (“Effective Date”).
If Suspensive Conditions are met, the Management Agreement will commence and be effective
from the Effective Date notwithstanding the Closing Date and will continue for a fixed period of
10 years as from the Effective Date.
4.2 Services Rendered
Next will inter alia be responsible and accountable to the board of Trustco for the following
services: i) Direct involvement and leadership with the group’s management team; ii) Head
Office Infrastructure; iii) Group sales and marketing; iv) Group Branding; v) Group HR; vi) Group
Legal; vii) Group Training; viii) Group Research; ix) Group public relations; x) Technical
assistance; xi) Implementation assistance; xii) Standard operating procedures; xiii) Training of
personnel; xiv) Setting standards and personnel; xv) Access to Facility Management; xvi) Access
to IT and telecoms; xvii) Group Capital Raising; xviii) Mergers and Acquisitions; xix) Budgeting
and all related processes; xx) Any other business as the Trustco Board of Directors directs from
time to time.
4.3 Management Fees
Trustco will be obliged to pay Next a Management Fee.
4.3.1 The Management Fee shall be determined on the last day (“Measurement Date”) of a
financial year (“Financial Year”), which Financial Year may be amended from time to
time.
4.3.2 The Management Fee shall be calculated over any period (“Measurement Period”) which
period may be shorter or longer than 12 months, in which case the numbers in such
Measurement Period shall be adjusted on a pro-rata basis to a 12-month period for
comparison purposes only. The final Management Fee for any Financial Year shall only be
capable of being calculated on or after the Measurement Date. The first Measurement
Period will be compared to the audited financial statements for the period ended 30
September 2020.
4.3.3 Next may, in its sole discretion, elect not to receive the Management Fee or elect to
receive partial payment or defer payment or repay a portion or all of the management
fee.
4.3.4 The Management Fee to be calculated for a Measurement Period, shall be calculated
based on a number of objectives and their relative performance (“Management Fee
Objectives”) as set out below: i) Corporate Performance Metrics; ii) Shareholder Return
Based Metrics; and iii) Pledge of assets of Next and/or its associates as defined in the JSE
Limited Listings Requirements (“JSE Listings Requirements”) and also includes Dr
Quinton van Rooyen (“Associates”) either as surety, guarantee and/or any subordination
of loans by Next and/or its Associates and/or individuals associated with Next to secure
a transaction and/or to provide any form of security to Trustco or the Trustco Group,
where the pledge is required;
4.3.4 The Management Fee shall be the sum of the amounts calculated from the above
individual Management Fee Objectives.
4.3.4.1 Corporate Performance Metrics
Measure Measurement Growth Target Compensation
Period
Total income per share Annually >Namibian CPIX + 5% 1% of Total income if target
met, otherwise 0.5%
(Limited to Zero)
Adjusted Earnings per Annually >Namibian CPIX + 5% 2% of Adjusted Earnings if
share target is met, otherwise 1%
(Limited to Zero)
Cash Generated from Annually >Namibian CPIX + 5% 2% of Cash Generated from
Operations after working Operations after working
capital changes capital changes if target is
met, otherwise 1%
(Limited to Zero)
Net Asset Value per share Annually >Namibian CPIX + 5% 2% per annum of Net Asset
Value after reaching a floor
of N$2,731,222,000 if target
is met, otherwise 1%
(Limited to Zero)
4.3.4.2 Shareholder Return Based Metrics
Should the share price of a Trustco share remain at the agreed levels set out below for a
period of at least 90 days on a Volume Weighted Average Price (“VWAP”) basis, and
subject to high water mark principles, a once off payment in Trustco shares will be
effected per category of share price target reached as set out below.
Share Price Equivalent Market Capital Compensation (Once off share
payment per category reached)
NAD 9.75 15.7 billion 4 040 096 Trustco shares
NAD 15.00 24.24 billion 5 656 135 Trustco shares
NAD 19.00 30.7 billion 7 272 174 Trustco shares
NAD 25.00 40 billion 8 888 212 Trustco shares
NAD 30.00 50 billion 10 504 251 Trustco shares
For each +25% share price Various +25% from previously issued
increase above NAD 30.00 number of shares
4.3.4.3 Pledge of Assets, sureties and guarantees provided by Next and/or its Associates
• 1.5% per annum of the value of assets pledged during the Measurement Period;
• 1.5% per annum of value of sureties, and guarantees provided as well as
subordination of loans, during the Measurement Period.
4.4 Replacement and superseding of previous agreements
The Management Agreement replaces and supersedes all prior or contemporaneous
management agreements with respect to the subject matter and all previous management
agreements will be terminated and deemed of no further force and effect and the parties to
any such other commitments and management agreements will have no further rights or
obligations thereunder.
5. CLASSIFICATION OF THE TRANSACTION
Related party transaction
Next is a material shareholder of Trustco and Dr Quinton van Rooyen is the controlling
shareholder of Next and thus considered to be a related party to Trustco in terms of paragraph
10.1(b)(i) and paragraph 10.1(b)(v) of the JSE Listings Requirements.
Accordingly, Next and its associates, which includes Dr Quinton van Rooyen the current CEO of
Trustco, are not entitled to vote at any meeting of shareholders relating to the passing of the
required resolutions to approve the implementation of the Management Agreement.
There is no maximum fee stipulated in the Management Agreement therefore in terms of
Paragraph 9.8 (c) of the Listings Requirements of the JSE Limited (“JSE Listings Requirements”)
the entering into of the Management Agreement will be categorised as a Category 1 Related
Party transaction.
A circular containing the full details of the Management Agreement, incorporating a notice
convening the required general meeting of Shareholders, any other required documentation,
will be distributed to Shareholders in due course. In the interim, the Managemet Agreement is
available for review at https://www.tgh.na/downloads/. Copies may also be obtained
electronically from the company secretary by sending an email to komada@tgh.na.
Windhoek, Namibia,
23 August 2021
Komada Holdings (Pty) Ltd
Company Secretary and Investor Relations Services to Trustco Group Holdings Limited
JSE Sponsor
Vunani Sponsors - Johannesburg
NSX Sponsor
Simonis Storm Securities Proprietary Limited – Windhoek
OTCQX Sponsor
J.P Galda & Co – New York
Date: 23-08-2021 03:45:00
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