Letter to Shareholders: Reduction and Repayment of Share Premium
As was stated in the directors' report contained in the 2002 Annual Report, subsequent to the declaration and payment of dividend number 8 during August/September 2002, the board obtained legal opinion which confirmed that its interpretation of the company's articles of association, read in conjunction with Section 90 of the Companies Act, was not correct in that the amount distributed of 175 cents per share included a capital payment, being share premium, of 75 cents per share. In terms of Article 3 of the articles of association, capital reductions require the approval of shareholders.
At the annual general meeting that was held on 7 November 2002, the shareholders present approved a resolution ratifying the reduction of share premium of 75 cents per share.
South African shareholders should take note of the following:
- Corporate shareholders who are subject to Secondary Tax on Companies ("STC") are advised that for purposes of calculating their STC position, 100 cents of the 175 cents per share distribution represents a dividend.
- For purposes of calculating Capital Gains Tax, the amount of 75 cents per share constitutes a capital repayment, and consequently the base cost must be reduced by this amount. For information, the published base cost at 30 September 2001 was R11.94.
Shareholders in other tax jurisdictions are advised to consult their financial advisors.
I C Watson
Friday, 29 November 2002