SHARE BUY-BACK QUESTIONS AND ANSWERS
The Board took the decision to offer a Buy-back after a number of Shareholders who hold small parcels of Shares indicated that they would be interested in selling them. Currently any shareholder who would like to dispose of their Shares has limited ability to do so. The Buy-back scheme provides a timely and effective mechanism.
The Company is in a solid financial position, with a strong balance sheet, with sufficient cash reserves to support a Buy-back of up to 10% of its Shares.
The offer price is $1.78 per Share.
There is a limit on the number of Shares that the Company can buy back in any calendar year. It has been set by Government regulation and means that we can only buy back 10% of our Shares. The amount of Shares you are able to sell back to the Company will depend on the quantity of Shares that other Shareholders wish to sell. There is no guarantee that your Shares will be bought back.
The Buy-back is subject to a minimum Application amount per Shareholder. The minimum number of Shares that a Shareholder may sell into the Buy-back is the lesser of 1,100 Shares or the total number of Shares held by that Shareholder.
Small Holders who have 1,100, 800 or 200 Shares wishing to participate in the Buy-back must offer to sell all of their Shares.
To participate in the Buy-back, you first need to consider how many Shares you wish to sell, unless you are a Small Holder (outlined in the question above) in which case your Application must be for all Shares you own.
If the number of Shareholders seeking to sell their Shares exceeds 10%, preference will be given to smaller Shareholders.
To submit your Application, complete the personalised Application Form accompanying the Buy-back booklet, then complete Box B on your personalised Application Form, which sets out the maximum number of Shares you may sell into the Buy-back.
The decision on which shares to Buy-back, from whom, will be based on the number of Shareholders that want to participate in the Buy-back. In the event that the 10% limit is exceeded, the Company will give priority to people with small shareholdings.
If Shareholders have listed their nominated bank accounts with Computershare they can receive the proceeds electronically. If they have not nominated their account with Computershare they will be mailed a cheque.
Information on how to nominate your bank account with Computershare was included in the March Bulletin sent to all Shareholders. A copy is also available on our website: https://longevityga.com.au/wp-content/uploads/2020/03/Shareholder-Bulletin-March-2020.pdf
At this point in time no decision has been made in relation to any more Buy-backs. That is a matter the Board may consider in the future.
It should be noted that due to Government regulations Share Buy-backs of this type are only able to be held once every 12 months.
Depending on your personal circumstances, there may be income tax consequences from selling your Shares in Longevity.
We have requested the Australian Taxation Office (ATO) to provide advice in a Class Ruling, which will explain how in this instance, the tax law will be applied to participants of the Buy-back scheme. The Class ruling is expected to be published after the Buy-back is completed. If the Buy-back occurs on or before 30 June 2020 (which is currently planned), additional income may be reportable in your 2020 tax return – which, for most taxpayers, covers the 12 month period to 30 June 2020.
Subject to the ATO’s Class Ruling, we currently expect the Share Buy-back price of $1.78 to be treated as having two components – for income tax purposes:
a. A capital component – of $0.85 per share.
b. An income component, to be treated as an unfranked dividend – of $0.93 per share.
We recommend you consult your tax agent or accountant for advice relevant to your specific financial situation.
This is only relevant to people who are entitled to receive a means-tested Australian Government income support payment–like the age pension or veterans’ service pension.
Depending on your personal circumstances, there may or may not be any social security consequences of selling your Shares back to Longevity and receiving the Buy-back proceeds.
Longevity is not authorized to give financial advice. Timely consultation with a licensed financial adviser is recommended. Alternatively, you may wish to contact your nearest Centrelink or Department of Veterans Affairs (DVA) office.
If you do not wish to sell your shares in Longevity, you do not need to take any action. Your holding will remain the same and you will continue to be a Shareholder in the Company. Nothing will have changed. However, your overall stake in the company will have increased as there will now be fewer Shareholders.
The Company will continue to provide Shareholders with regular updates of our activities, produce an Annual Report and hold an Annual General Meeting to inform you of our progress and strategy.
Longevity is in a strong financial position.
The Company is profitable, having reported profits amounting to over $16.2M over the last 5 1/2 years. Please refer to the 2019 Annual Report for further information on the company’s financial statements. The company has significantly increased in value since demutualisation when you acquired your Shares.
The company’s initial projects have been in a development stage in the last few years. In the next 12-18 months these initial developments will be completed, and the business will continue to grow and become more profitable. Other projects in our pipeline will commence development and contribute to future company growth.
The Board regularly monitors Longevity’s financial position, ensuring that the company’s policies and procedures are followed and audited by external parties.
The Board acknowledges, and exercises its responsibility to ensure that Longevity complies with the Corporations Act, ensuring that all Financial Reporting is accurate and timely. All reporting dating back to 2010 is available on the company’s website.