Wrap Text
Supplementary Information Announcement
LIBERTY TWO DEGREES
JSE share code: L2D
ISIN: ZAE000230553
(Approved as a REIT by the JSE)
(“CISIP”)
a portfolio established under the Liberty Two Degrees Scheme, a collective investment scheme in property
established in terms of the Collective Investment Schemes Control Act, No 45 of 2002, as amended (“CISCA”), and
managed by STANLIB REIT Fund Managers (RF) Proprietary Limited (Registration number: 2007/029492/07)
(“SRFM” or the “Manager”)
LIBERTY TWO DEGREES LIMITED
Registration number: (2018/388906/06)
JSE share code: L2D
ISIN: ZAE000260576
(“New L2D””)
SUPPLEMENTARY INFORMATION ANNOUNCEMENT
Unitholders of the CISIP (“Unitholders”) are referred to the announcement dated 23 July 2018 regarding:
- the conversion of the CISIP to a Corporate REIT, pursuant to which each Unitholder will receive one ordinary
share in New L2D (“New L2D Share”) for every existing participatory interest in the CISIP (“Unit”) held and
New L2D will be listed in place of the CISIP, which will be de-listed and voluntarily wound up (the
“Conversion”);
- the internalisation of the management company of the CISIP (the “Internalisation”), being a related party
transaction;
- the related party acquisition of undivided shares in properties (the “Additional Properties”) from LGL (the
“Acquisition”); and
- the cancellation of the existing Put Option between LGL and the CISIP for no consideration
(collectively, the “Proposed Transactions”).
Unitholders are further referred to the circular setting out full terms of the Proposed Transactions (“Circular”),
posted to Unitholders on 30 July 2018. This announcement serves to provide supplementary information and
clarification (the “Supplementary Information”) in respect of the Proposed Transactions. The Supplementary
Information is supplemental to, and should be read in conjunction with, the Circular.
The Supplementary Information includes clarification of the pro forma financial effects as disclosed in the Circular
in respect of the Acquisition only (and consequential changes thereto) to reflect New L2D's effective interest in
the Additional Properties acquired. The clarification is in respect of the “Property portfolio revenue” which is
restated by R11 476 521 to R52 959 145 and in respect of the “Property operating expenses” which is restated
by R1 483 719 to R12 878 264. The net impact of this restatement is an increase of R9 992 802 in the “Total
earnings after tax” under the “Acquisition” column and the “After the Proposed Transactions” column respectively.
The full amended text of the Summarised Pro Forma Financial Effects relating to the Proposed Transactions
(disclosed as Paragraph 6 of the Circular); the Pro Forma Statement of Comprehensive Income; and the Pro
Forma Statement of Financial Position (each disclosed in Annexure 1 of the Circular) forms part of this
Supplementary Information as included below.
As a result of the clarifications noted above, PWC, the independent auditors, has issued an unqualified review
report on the special purpose historical financial information of the Acquisition which replaced the report of the
same title issued by PWC on 24 July 2018. In addition, PWC, the Independent Reporting Accountants, has issued
an unqualified assurance report on the pro forma financial information as supplemented by this Supplementary
Information which replaces the report issued on 24 July 2018 as included in Annexure 2 of the Circular. Together,
the report on the special purpose historical financial information of the Acquisition and the assurance report on
the pro forma financial information are available for inspection at the registered office of the CISIP, on the CISIP’s
website at www.liberty2degrees.co.za/investor-information, and at Standard Bank’s office during business hours
from the date of this announcement up to and including Tuesday, 28 August 2018.
All other details of the Circular remain unchanged including the Important Dates and Times detailed on page 9 of
the Circular and the Independent Reporting Accountants’ Report on the Adjustment Column included as Annexure
3 of the Circular.
Capitalised terms used in this Supplementary Information bear the same meaning as the capitalised and defined
terms used in the Circular.
Summarised Pro Forma Financial Effects relating to the Proposed Transactions
The table below sets out the summarised pro forma financial effects of the Proposed Transactions, based on
New L2D’s audited financial information as at its incorporation date being 10 July 2018.
It should be noted that the summarised pro forma financial effects has been prepared to assist Unitholders in
assessing the impact of the Proposed Transactions on New L2D.
The pro forma statement of comprehensive income and the pro forma statement of financial position have been
prepared to show the financial effects of the Proposed Transactions. The pro forma financial effects are calculated
for the six months ended 30 June 2018 for the purposes of the consolidated statement of comprehensive income
and as at 30 June 2018 for the purposes of the consolidated statement of financial position.
These pro forma financial effects are prepared for illustrative purposes only, to provide information about how the
Proposed Transactions may have affected the financial information presented by New L2D for the period ended
30 June 2018. Because of their pro forma nature, they may not provide a fair reflection on New L2D’s financial
position, changes in equity, results of operations or cash flows after the Proposed Transactions.
The Directors are responsible for the preparation of the pro forma financial information. The pro forma financial
information has been prepared using accounting policies that are consistent with IFRS and with the basis on
which the historical financial information has been prepared in terms of the accounting policies of the CISIP as at
30 June 2018, as adopted by New L2D. The pro forma financial information has been prepared in accordance
with the Listings Requirements and the Revised SAICA Guide on Pro Forma Financial Information.
Set out in the table below is a summary of the pro forma financial effects of the Proposed Transactions. The pro
forma financial effects are based on the published unaudited interim financial results of the CISIP for the six
months ended 30 June 2018, the unpublished reviewed interim financial results of SRFM for the six months ended
30 June 2018, and the reviewed management accounts of the Additional Properties for the six months ended 30
June 2018. It should be read in conjunction with the Independent Reporting Accountants’ review opinions thereon.
After the
Internali- Transac- Proposed
New sation Acquisi- Debt Conver- tion Transac- %
R’000 L2D (1) Subco (1) CISIP (2) (3) (6)
, tion (4) raised (5) sion costs (6) tions Change
Distribution per share – – 29.39 1.02 4.42 (7.51) – (1.43) 25.90 (11.88)
Basic and diluted – – 21.50 1.02 4.42 (7.51) – (1.43) 18.01 (16.24)
earnings per share
Headline earnings per – – 28.86 1.02 4.42 (7.51) – (1.43) 25.37 (12.10)
share
Net asset value per share – – 9.81 (0.28) – – – (0.02) 9.51 (3.05)
Net tangible asset value – – 9.81 (0.28) – – – (0.02) 9.51 (3.05)
per share
Weighted average – – 905 792 – – – – – 905 792 –
number of shares in issue
(’000) (7)
Total number of shares in – – 908 443 – – – – – 908 443 –
issue (’000) (7)
Notes to pro forma financial effects:
1. Pursuant to the Proposed Transactions, the CISIP has acquired New L2D and New L2D has acquired the issued share in Subco (a shelf
entity with no assets or liabilities other than R100 of share capital and cash). The assets and liabilities of the CISIP (other than the liability in
relation to the Final CISIP Distribution and assets necessary to settle the Final CISIP Distribution) will be transferred to Subco in exchange
for the assumption by Subco of those liabilities and the issue of Subco Shares to the CISIP pursuant to the Exchange Agreement. On the
day after the issue of the Subco Shares to the CISIP, pursuant to the Amalgamation Agreement, the CISIP will dispose of all its assets (other
than assets necessary to settle the Final CISIP Distribution) in the form of the Subco Shares and remaining liabilities (other than the liability
in relation to the Final CISIP Distribution) to New L2D in consideration for the assumption by New L2D of those liabilities and the issue of
shares in New L2D and distribute all of the issued shares of New L2D to Unitholders, who will receive one New L2D Share for every Unit
held. The financial statements of New L2D and Subco have been audited by PWC, the independent auditors, and an unqualified opinion has
been expressed on the respective sets of financial statements.
2. Extracted, without adjustment (except where detailed otherwise in the notes to the pro forma financials set out in this announcement and in
Annexure 1 of the Circular relating to the Final CISIP Distribution), from the CISIP’s unaudited interim financial statements for the six months
ended 30 June 2018.
3. Extracted, without adjustment (except where detailed otherwise in the notes to the pro forma financials set out in this announcement and in
Annexure 1 of the Circular relating to Internalisation adjustments), from SRFM’s reviewed interim financial statements for the six months
ended 30 June 2018.
4. Extracted, without adjustment (except where detailed otherwise in the notes to the pro forma financials set out in this announcement and in
Annexure 1 of the Circular relating to the Acquisition), from the reviewed management accounts of the Additional Properties for the six months
ended 30 June 2018.
5. Represents the adjustment for interest on the R1.5 billion debt used to finance the Internalisation (R300 million) and the Acquisition (R1.2
billion), calculated on a debt cost inclusive blended all-in rate of 9%. Debt raising costs of R13.5 million will be amortised over the term of the
debt raised in line with IFRS 9 Financial Instruments, which is included in the all-in blended rate.
6. Represents an aggregate of the estimated costs to be incurred by either New L2D or Subco in respect of the Proposed Transactions which
are currently estimated at R16.2 million (excluding VAT). Transaction costs of R12.9 million (excluding VAT) will be expensed, R2.4 million
(excluding VAT) will be capitalised pursuant to the Acquisition and R894 000 will be expensed directly in equity. The treatment of transaction
costs has been disclosed in the detailed notes to the pro forma financials set out in this announcement and in Annexure 1 of the Circular.
7. Unitholders will receive 1 New L2D Share for every Unit held pursuant to the Amalgamation Agreement. Subject to this issuance, the total
number of New L2D Shares in issue will not change as a result of the Proposed Transactions, being 908 443 334 New L2D Shares. However,
New L2D will acquire control over the Incentive Plan and will need to consolidate 2 651 615 allocated New L2D Shares therein, as at the
Effective Date, and account for such shares as treasury shares. The Incentive Plan shares are all fully issued and rank in full for all dividends
or other distributions declared, made or paid, however, these are excluded from the calculation of basic, diluted and headline earnings per
share or the calculation of distribution per share.
8. The Internalisation has been accounted for as a business combination under common control in line with New L2D’s accounting policy.
Statement of Comprehensive Income
The pro forma statement of comprehensive income below presents the pro forma effects of the Proposed Transactions on the audited results of New L2D, on the
assumption that the Proposed Transactions were effective 1 January 2018.
After the
Proposed
New Internalisa- Acquisition - Transaction Transactions -
R’000 L2D (1) Subco (1) CISIP (2) tion (3) restated (5) Debt raised (6) Conversion costs (7) restated
Property portfolio revenue – – 417 213 – 52 959 – – – 470 172
Rental and related income – – 422 056 – 52 959 – – – 475 015
Adjustment for the straight-lining of operating income – – (4 843) – – – – (4 843)
Property operating expenses – – (144 425) – (12 878) – – – (157 303)
Net rental and related income – – 272 788 – 40 081 – – – 312 869
Administration expenses – – (2 985) – – – (2 985)
Net property income – – 269 803 – 40 081 – – – 309 884
Asset Management fee – – (14 565) 14 565 (3a) (4) – – – –
Profit from operations – – 255 238 14 565 40 081 – – – 309 884
Net interest income – – 6 148 – – (68 055) – – (61 907)
interest income – – 6 148 – – – – – 6 148
Interest expense – – – – – (68 055) – – (68 055)
Dividends received on financial instruments – – – – – – – – –
Asset Management fee income (3.a) – – – 35 578 – – – – 35 578
Other administration expenses (3.a) – – – (40 883) – – – (12 910) (53 793)
Loss on disposal of financial instruments – – (4 153) – – – – – (4 153)
Profit before fair value adjustments – – 257 233 9 260 40 081 (68 055) – (12 910) 225 609
– – (62 499) – – – – – (62 499)
Net fair value adjustments on investment properties – – (67 342) – – – – – (67 342)
Adjustment for straight-lining of operating lease – – 4 843 – – – – – 4 843
income
Fair value adjustments on equity instrument – – – – – – – –
Total earnings before tax – – 194 734 9 260 40 081 (68 055) – (12 910) 163 110
Income tax expense – – – – – – – – –
Total earnings after tax – – 194 734 9 260 40 081 (68 055) – (12 910) 163 110
After the
Proposed
New Internalisa- Acquisition - Transaction Transactions -
R’000 L2D (1) Subco (1) CISIP (2) tion (3) restated (5) Debt raised (6) Conversion costs (7) restated
Headline earnings reconciliation
Total earnings after tax – – 194 734 9 260 40 081 (68 055) – (12 910) 163 110
Net fair value adjustments on investment
– – 62 499 – – – – – 62 499
properties
Loss on disposal of financial instruments – – 4 153 – – – – – 4 153
Headline earnings (8) 261 386 9 260 40 081 (68 055) – (12 910) 229 762
Basic and diluted earnings per unit
Basic earnings per unit (cents) (8) – – 21.50 1.02 4.42 (7.51) – (1.43) 18.01
Fully diluted earnings per unit (cents) (8)
– – 21.50 1.02 4.42 (7.51) – (1.43) 18.01
Headline earnings per share (cents) (8)
– – 28.86 1.02 4.42 (7.51) – (1.43) 25.37
Notes and assumptions to the pro forma effects on the Statement of Comprehensive Income:
1. Pursuant to the Proposed Transactions, the CISIP has acquired New L2D and New L2D has acquired Subco. The assets and liabilities of the CISIP will be transferred to Subco in exchange for Subco
shares pursuant to the Exchange Agreement. Thereafter, the CISIP will transfer all of its assets and liabilities, being shares in Subco, to New L2D in accordance with the Amalgamation Agreement
and distribute all of the issued shares of New L2D to Unitholders, who will receive one share for every Unit held. The Interim financial statements of New L2D and Subco have been audited by PWC,
the independent auditors, and unqualified opinions have been expressed on the respective sets of financial statements.
2. Extracted, without adjustment, from the CISIP’s 30 June 2018 published unaudited interim financial statements.
3. Extracted, without adjustment (except as detailed below), from SRFM’s 30 June 2018 reviewed interim financial statements. A review has been conducted by PWC, the independent auditors, in
relation to the interim financial statements of SRFM for the period ended 30 June 2018. The table below sets out the adjustments made to the Statement of Comprehensive Income of SRFM for the
purposes of presenting the pro forma Statement of Comprehensive Income for New L2D:
Pro forma
acquired by
R’000 SRFM Adjustments New L2D
Total asset management fee income (c) 50 014 (14 436) 35 578
Asset management fee (a) 46 440 (14 436) 32 004
Sundry income 1 040 – 1 040
Interest income 2 534 – 2 534
Operating expenses (7) (40 883) – (40 883)
Asset management fee saving (a) (4) – 14 565 14 565
Operating profit (b) 9 131 129 9 260
Finance expense – – –
Profit before taxation 9 131 129 9 260
Taxation (e) (2 620) 2 620 –
Net profit for the year 6 511 2 749 9 260
Other comprehensive income – – –
Total comprehensive income 6 511 2 749 9 260
a) The adjustment for R14.4 million of asset management fees represents fees paid by the CISIP to SRFM for the period ended 30 June 2018. Such asset management fees will not be payable by the
CISIP following the implementation of the Internalisation.
b) The difference between the asset management fee adjustment above and the saving by the CISIP of R129 000 is due to VAT that the CISIP was not allowed to claim on the asset management fees
incurred. This amount reverses on consolidation of the CISIP.
c) The R35.6 million pro forma total asset management fee income represents the asset management fee charged to the Liberty Property Portfolio by SRFM, sundry income and interest income earned
by SRFM which will continue to be payable to Subco in accordance with the terms and conditions of the New Asset Management Agreement.
d) No adjustment has been made to the R4.6 million expense recognised by SRFM in respect of the cash settled share incentive scheme expense as a result of the change to an equity settled scheme,
included within operating expenses.
e) SRFM incurred an income tax expense of R2.6 million for the period ended 30 June 2018. Pursuant to the Proposed Transactions, Subco will acquire the business of SRFM in terms of the Sale of
Business Agreement which will include all of its assets and liabilities (and associated deferred tax assets thereto). Subco will qualify as a controlled company in terms of section 25BB of the Income
Tax Act and consequently, the profits of SRFM’s business will not be subject to income tax to the extent that such profits are paid by Subco as a qualifying distribution in accordance with section
25BB of the Income Tax Act. Subco is expecting to comply with the requirements of section 25BB of the Income Tax Act and to pay all of its distributable income in the form of a qualifying distribution
to New L2D and subsequently, New L2D will pay such qualifying distribution to Shareholders. The pro forma income tax expense for SRFM was consequently adjusted to zero.
4. Represents the adjustment for R14.5 million asset management fees paid by the CISIP to SRFM for the period ended 30 June 2018. Such asset management fees will not be payable by the CISIP following
the implementation of the Internalisation.
5. Represents the property income and expenses from the Additional Properties acquired pursuant to the Acquisition. The figures are extracted, without adjustment from the management accounts of the
Additional Properties for the six months ended 30 June 2018, which have been reviewed by PwC, the independent auditors.
6. Represents the adjustment for interest on R1.5 billion of debt used to finance the Internalisation and the Acquisition Considerations, calculated on a cost inclusive blended all-in rate of 9%. Anticipated debt
raising costs of R13.5 million will be amortised over the term of the debt in line with IFRS 9 Financial Instruments, which is included in the all-in blended rate.
7. Represents the adjustment for an estimated R12.9 million (excluding VAT) of once-off transaction costs to be incurred by both New L2D and Subco in respect of the Proposed Transactions post 1 July 2018.
In addition, once-off costs of R6.8 million (excluding VAT) associated with the Proposed Transactions have already been incurred and expensed within SRFM’s results for the six months to 30 June 2018.
The transaction costs are expensed in line with New L2D’s accounting policy for common control transactions.
8. Calculation is based on the weighted average number of New L2D Shares outstanding equal to 905 791 719 (after excluding 2 651 615 Incentive Plan shares). The Incentive Plan shares rank in full for all
dividends and distributions. The basic and diluted earnings per share including the Incentive Plan shares are both 17.95 cents per share after the Proposed Transactions.
9. Save for transaction costs, all adjustments are expected to have a continuing effect.
Statement of Financial Position
The pro forma statement of financial position below presents the effects of the Proposed Transactions on New L2D on the assumption that the Proposed Transactions were
effective on 30 June 2018 and that New L2D was incorporated on that date.
After the
Internalis- Acquisition Debt raised Transaction Proposed
R`000 New L2D (1) Subco (1) CISIP (2) ation (3) (4) (6)
Conversion (7) costs (8) Transactions
ASSETS
Non-current assets – – 8 705 235 1 102 1 200 000 – – 2 384 9 908 721
Investment properties – – 8 656 908 – 1 200 000(5) – – 2 384 9 859 292
Investment properties under development – – 48 327 – – – – – 48 327
Property, plant & equipment – – – 1 102 – – – – 1 102
Other assets – – – – – – – – –
Current assets – – 299 234 74 927 – – – (3 279) 370 883
Trade and other receivables – – 163 408 11 266 – – – – 174 674
Financial instruments – – 132 831 59 186 – – – – 192 017
Tax receivable – – - 2 079 – – – – 2 079
Loan to STANLIB Asset Management – – - 385 – – – – 385
Cash and cash equivalents – – 2 995 2 011 – – – (3 279) 1 727
Total assets – – 9 004 469 76 029 1 200 000 – – (894) 10 279 604
LIABILITIES
Non-current liabilities – – – – – 1 500 000 – – 1 500 000
Interest bearing debt – – – – – 1 500 000 – – 1 500 000
Other liabilities – – – – – – – – –
Current liabilities – – 116 378 33 048 – – – 12 910 162 337
Trade and other payables – – 116 378 26 004 – – – 12 910 155 292
Employee benefits liability – – – – – – – – –
Loan from Liberty Holdings – – – 7 045 – – – – 7 045
Current taxation payable – – – – – – – – –
Loan from STANLIB Asset Management – – – – – – – – –
Total liabilities – – 116 378 33 048 – 1 500 000 – 12 910 1 662 337
Participatory units` capital and reserve
Capital – – 8 668 950 – – 224 141 – 8 888 091
Retained surplus – – 266 188 – – (266 188) (13,804) (13 805)
Share-based payment reserve (3, c) – – - 17 730 – – – – 17 730
Non-distributable reserve – – (42 047) (274 750) – – 42 047 – (274 750)
Total unitholder / shareholder funds (7) – – 8 888 091 (257 019) – – - (13 804) 8 617 267
Total unitholder / shareholder funds and – – 9 004 469 (223 971) – 1 500 000 – (894) 10 279 604
liabilities
NAV per unit / share (excludes deferred tax) (9) – – 9.81 (0.28) – – – (0.02) 9.51
NTAV per unit / share (excludes deferred tax) (9) – – 9.81 (0.28) – – – (0.02) 9.51
Notes and assumptions to the pro forma effects on the Statement of Financial Position:
1. Pursuant to the Proposed Transactions, the CISIP has acquired New L2D and New L2D has acquired Subco. The assets and liabilities of the CISIP will be transferred to Subco in exchange for Subco Shares
pursuant to the Exchange Agreement. Thereafter, the CISIP will transfer all of its assets and liabilities, being Subco Shares, to New L2D in accordance with the Amalgamation Agreement and distribute all of
the New L2D Shares to Unitholders, who will receive one New L2D Share for every Unit held. The interim financial statements of New L2D and Subco have been audited by PWC, the independent auditors,
and unqualified opinions have been expressed on the respective sets of financial statements.
2. Extracted, without adjustment, from the CISIP’s 30 June 2018 unaudited interim financial statements.
3. Extracted, without adjustment (except as detailed below), from SRFM’s 30 June 2018 reviewed interim financial statements. SRFM’s interim financial statements have been reviewed by PWC, the independent
auditors. The Internalisation is to be accounted for as a business combination under common control. The table below sets out the assets and liabilities that would be assumed by New L2D from acquiring
SRFM and the adjustments made thereto:
Pro forma
acquired by New
Acquired assets and liabilities SRFM Adjustments L2D
Non-current assets 6 067 (4 965) 1 102
Property, plant & equipment 1 102 - 1 102
Deferred tax (a) 4 965 (4 965) -
Current assets 77 289 (2 362) 74 927
Trade and other receivables (b) 13 628 (2 362) 11 266
Tax receivable 2 079 - 2 079
Cash and cash equivalents 2 011 - 2 011
Financial instruments 59 186 - 59 186
Loan to Stanlib Asset Management 385 - 385
Total assets 83 355 (7 326) 76 029
Non-current liabilities - - -
Current liabilities 50 779 (17 730) 33 048
Trade and other payables 26 004 26 004
Employee benefits liability (c) 17 730 (17 730) -
Loan from Liberty Holdings 7 045 - 7 045
Current taxation payable - - -
Loan from STANLIB Asset Management - - -
Share Based Payment Reserve (c) - 17 730 17 730
Net assets value acquired 32 576 (7 326) 25 250
Consideration 300 000 - 300 000
Common control adjustment (267 424) (7 326) (274 750)
a) In terms of the Sale of Business Agreement, SRFM will transfer its business, which will include all of its assets and liabilities (and associated deferred tax assets thereto) to Subco. Subco will be a
controlled company in terms of section 25BB of the Income Tax Act and consequently, having paid out its net profits in the form of a qualifying distribution as expected, will not pay income tax on its
net profits. As such, the deferred tax asset is unlikely to be realised in Subco and is therefore derecognised.
b) Represents the adjustment for one month’s asset management fees owing to SRFM as payable by the CISIP. Such asset management fees will not be payable by the CISIP following the
implementation of the Proposed Transactions.
c) Represents an adjustment for the change in the employee share-based payments from being a cash settled scheme to an equity settled scheme that will be controlled and administered by New
L2D. For the purposes of these pro forma financial effects, it is assumed that the valuation of the cash settled share-based payment is unadjusted as a result of the change to an equity settled
scheme.
4. Extracted, without adjustment, from the management accounts of the Additional Properties which have been reviewed by PWC, the independent auditors, as at 30 June 2018.
5. Pursuant to the Acquisition, Subco will acquire the Additional Properties for R1.2 billion which reflects their independent market value as at 30 September 2018. The Additional Properties will be accounted
for at fair value in accordance with IAS 40 Investment Properties.
6. Represents the adjustment for the debt of R1.5 billion used to finance the Internalisation Consideration (R300 million) and the Acquisition Consideration (R1.2 billion). The blended all-in rate of 9% incorporates
the amortisation of R13.5 million of debt fundraising costs in accordance with IFRS 9 Financial Instruments.
7. Represents the reversal of reserves within CISIP into Capital.
a) Pursuant to the Exchange Agreement, the CISIP will transfer all of its assets and liabilities (other than the liability in relation to the Final CISIP Distribution and assets necessary to settle the Final
CISIP Distribution) to Subco in exchange for the assumption by Subco of those liabilities and the issue of 908 443 334 Subco Shares. The adjustment reflects the new capital balance that would
have been raised as at 30 June 2018 via the issue of 908 443 334 Subco Shares to the CISIP. No adjustment to the pro forma financial information is made in respect of the Final CISIP Distribution.
b) Pursuant to the Amalgamation Agreement, the CISIP will transfer all of its assets (other than assets necessary to settle the Final CISIP Distribution), being 908 443 334 Subco Shares and remaining
liabilities (other than the liability in relation to the Final CISIP Distribution), to New L2D, in consideration for the issue by New L2D of 908 443 333 New L2D Shares to the CISIP. The adjustment
reflects the new capital balance that would have been raised as at 30 June 2018 via the issue by New L2D of 908 443 334 New L2D Shares to the CISIP. No adjustment to the pro forma financial
statements is made for the Final CISIP Distribution.
8. Estimated once-off transaction costs in relation to the Acquisition of R2.4 million (excluding VAT) will be capitalised to the cost of the Additional Properties in line with the requirements of IAS 40 Investment
Properties, with such costs paid in cash. Further once-off transaction costs of R12.9 million (excluding VAT) will be expensed as incurred with R894 000 being expensed directly through equity. Once-off
costs of R6.8 million (excluding VAT) associated with the Proposed Transactions have already been incurred and expensed within SRFM’s results for the six months to 30 June 2018. The transaction costs
are treated in line with New L2D’s accounting policy for common control transactions.
9. Calculation is based on the pro forma New L2D Shares outstanding equal to 905 791 719 (after excluding Incentive Plan shares of 2 651 615). The Incentive Plan shares rank in full for all dividends and
distributions. The NAV and TNAV per share including the Incentive Plan shares are both R9.49 after the Proposed Transactions.
Johannesburg
6 August 2018
Financial Advisor and Transaction Sponsor
The Standard Bank of South Africa Limited
Independent sponsor
Questco Corporate Advisory Proprietary Limited
Legal Advisers to Liberty Two Degrees
Allen & Overy (South Africa) LLP
Transaction Attorneys and Tax Advisors
Webber Wentzel
Independent Reporting Accountants and Auditors
PricewaterhouseCoopers Inc.
Independent Expert
Ernst & Young Advisory Services Proprietary Limited
Investor Relations
Gareth Rees
Contact number: 011 448 6804
Date: 06/08/2018 01:30:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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