1. INTRODUCTION AND BACKGROUND

Transcription

1 REDEFINE PROPERTIES LIMITED (Incorporated in the Republic of South Africa) (Registration number 1999/018591/06) JSE share code: RDF ISIN: ZAE (Approved as a REIT by the JSE) ( Redefine ) FOUNTAINHEAD PROPERTY TRUST (A collective investment scheme in property registered in terms of the Collective Investment Schemes Control Act, No. 45 of 2002) ( Fountainhead ) Managed by Fountainhead Property Trust Management Limited (Registration number 1983/003324/06) ( FPTML ) JSE share code: FPT ISIN: ZAE (Approved as a REIT by the JSE) JOINT ANNOUNCEMENT REGARDING THE CONCLUSION OF AN AGREEMENT BETWEEN REDEFINE, FOUNTAINHEAD AND FPTML AND WITHDRAWAL OF THE FOUNTAINHEAD CAUTIONARY ANNOUNCEMENT 1. INTRODUCTION AND BACKGROUND 1.1. Fountainhead unitholders are referred to the previous cautionary announcements, the last of which was released on SENS on 18 June 2014 in terms of which Fountainhead unitholders were advised that the engagement between Redefine and FPTML in relation to the possible terms of a potential merger between Redefine and Fountainhead was continuing and Fountainhead unitholders were accordingly advised to exercise caution when dealing with their Fountainhead units until a further announcement was made Fountainhead unitholders are now advised that given Redefine s strategic stake in Fountainhead (which is currently approximately 65.9% of Fountainhead s issued units) and the fact that Redefine s wholly owned subsidiary, FPTML, manages the Fountainhead property portfolio, the board of directors of Redefine and the independent committee of the board of directors of FPTML, comprising Michael Kirchmann, Victor Anthony Christian, Haroon Yusuf Laher, Marius Barkhuysen, Thomas Alexander Wixley and David Stanley Savage (the independent committee ), have agreed that a merger of Redefine and Fountainhead makes strategic sense In this regard, Redefine has entered into an agreement (the transaction agreement ) with Fountainhead and FPTML in terms of which Fountainhead will dispose of all its assets, including the entire Fountainhead property portfolio in exchange for 82 new Redefine shares (the Redefine consideration shares or consideration shares ) for every 100 Fountainhead units in issue and the assumption by Redefine of all of Fountainhead s liabilities, including Fountainhead s interest-bearing debt (the transaction ) If the transaction is approved and becomes unconditional, Fountainhead will no longer qualify for a listing under the Listings Requirements of the stock exchange operated by the JSE limited ( JSE ) and, simultaneously with the implementation of the transaction, Fountainhead will be delisted from the JSE. The winding up of Fountainhead will commence as soon as practically possible after the effective date,

2 being 1 September 2014 (the effective date ) and will be completed as soon as practically possible after implementation of the transaction. 2. RATIONALE FOR THE TRANSACTION 2.1. Redefine is currently the largest unitholder in Fountainhead and is also the owner of FPTML, which is the asset manager and controls all the assets of Fountainhead. Given these interests of Redefine in Fountainhead and FPTML, there is no other party that can acquire the Fountainhead property portfolio without Redefine s consent. The transaction will allow for additional benefits in that the transfer of all of Fountainhead s assets to Redefine will result in: the assets being managed in an optimal manner on a portfolio basis; lower costs as a result of the removal of costs associated with retaining Fountainhead as a separate entity; and more efficient asset allocation and balance sheet management as there would be no contentious allocation decisions to be made between housing an asset in Fountainhead as opposed to Redefine The trade in Fountainhead on the JSE has dropped significantly since Redefine acquired its approximate 65.9% stake and this lower tradability makes it harder for minority unitholders to exit from their holding. The transaction provides an opportunity for Fountainhead unitholders to exchange their Fountainhead units for more liquid Redefine shares While existing Fountainhead unitholders are supportive of its portfolio composition, there are divergent views on the future direction of Fountainhead. The transaction will expose Fountainhead unitholders to a diverse property portfolio and property assets valued at approximately R44.5 billion and the benefits of economies of scale and cost savings due to synergies between the Fountainhead and Redefine property portfolios will benefit Fountainhead unitholders and Redefine over time. 3. MECHANICS OF THE TRANSACTION 3.1. Fountainhead has, subject to the fulfilment of the conditions precedent set out in paragraph 4 below, agreed to sell to Redefine all of its assets including the Fountainhead property portfolio in exchange for 82 Redefine consideration shares for every 100 Fountainhead units in issue on the record date, which is expected to be 5 December 2014 (the record date ) and the assumption by Redefine of all of Fountainhead s liabilities including Fountainhead s interest-bearing debt The effective date of the transaction is 1 September Fountainhead will, by no later than 8 October 2014 or such later date as may be agreed with Redefine, declare its income distribution in respect of the six month period ending 31 August 2014 (the Fountainhead 2014 final distribution ) on the following basis: the amount of the Fountainhead 2014 final distribution will be an amount equal to the distributable income of Fountainhead in respect of the six month period ending 31 August 2014, as determined as soon as practicable after 31 August 2014 in accordance with the applicable provisions of the Fountainhead trust deed (the Fountainhead deed ); and

3 the record date for participation in the Fountainhead 2014 final distribution shall be a date which is after the date upon which the amount of the Fountainhead 2014 final distribution has been finally determined; and earlier than (i) the record date for participation in the Redefine income distribution in respect of the six month period ending 31 August 2014 (the Redefine 2014 final distribution ) and (ii) the record date for receipt of the Redefine consideration shares Redefine will, on the effective date, as part of its assumption of Fountainhead s liabilities, assume Fountainhead's obligations in respect of the payment of the Fountainhead 2014 final distribution, and will accordingly make payment of the Fountainhead 2014 final distribution directly to the relevant Fountainhead unitholders who may be entitled thereto, as and when required in terms of the Fountainhead deed and the applicable JSE timetables It is expected that on 1 December 2014 (the Redefine consideration shares issue date ) and in exchange for all the assets of Fountainhead, including the entire Fountainhead property portfolio: Redefine will assume all of Fountainhead s liabilities including inter alia Fountainhead s interest-bearing debt; and in settlement of the balance of the purchase price for Fountainhead s assets including the entire Fountainhead property portfolio, Redefine will issue the Redefine consideration shares; and in settlement of the distribution by Fountainhead of the Redefine consideration shares to the Fountainhead unitholders, as further described in paragraph 3.13 below, Redefine will issue the Redefine consideration shares directly to the Fountainhead unitholders Accordingly, Fountainhead unitholders will receive directly from Redefine 82 Redefine consideration shares, subject to the rounding principle contained in the JSE Listings Requirements (the rounding principle ), for every 100 Fountainhead units held on the record date (the consideration ratio ). The rounding principle requires that the allocation of Redefine shares will be such that unitholders will not be allocated a fraction of a share and as such any entitlement to receive a fraction of a share which is less than one-half of a share, will be rounded down to the nearest whole number; and any share which is equal to or greater than one-half of a share but less than a whole share, will be rounded up to the nearest whole number The Redefine consideration shares will be issued: ex entitlement to the Redefine 2014 final distribution; and cum entitlement to the normal income distribution that will be declared by Redefine for the six months ending 28 February Redefine has warranted in the transaction agreement that the Redefine consideration shares will be entitled to participate fully in all subsequent distributions declared by Redefine and has undertaken that it will not, prior to the Redefine consideration shares issue date, make any special or unusual distribution.

4 3.9. Redefine understands that the following properties ( the pre-emptive properties ) are subject to preemptive rights, rights of first refusal, options or similar rights ( pre-emptive rights ) which may be triggered by the transaction and for this purpose the parties have ascribed the following sale price to each such property: Property name Sale price N1 City Mall R Constantia Kloof 3 R Sunridge R Fountainhead has entered into agreements for the acquisition of certain properties and the disposal of certain properties. The transaction agreement contains provisions which set out how these properties are to be dealt with insofar as they form part of Fountainhead s property portfolio The only warranties that have been sought by Redefine and given by FPTML and Fountainhead are that: Fountainhead is the sole and beneficial owner of the Fountainhead property portfolio as at the signature date of the transaction agreement; and Fountainhead will, immediately prior to the effective date, be the sole and beneficial owner of the Fountainhead property portfolio and will, on the effective date, implementation date (as defined in paragraph 3.12 below) and transfer date (being the date of registration of transfer of each of the properties in the Fountainhead property portfolio into the name of Redefine ( transfer date )), be able to deliver unencumbered title to the entire Fountainhead property portfolio to Redefine (subject to paragraph 3.9 above and subject to any mortgage bonds securing any interest-bearing debt to be assumed by Redefine in terms of paragraph above) During the period from the signature date to the third business day following the date upon which the last of the conditions precedent set out in paragraph 4 below is fulfilled (the implementation date ), Fountainhead and FPTML have undertaken to procure that: Fountainhead will continue to operate in the ordinary, normal and regular course of business; they will not effect or otherwise commit Fountainhead to any acquisitions, disposals or changes to the Fountainhead property portfolio and/or Fountainhead s funding terms other than (i) those which Fountainhead or FPTML are already contractually bound to effect or agree to or (ii) with Redefine s consent which shall not be unreasonably withheld or delayed; and they will not commit to any other contractual arrangements other than in the ordinary and regular course of its business without Redefine s consent which shall not be unreasonably withheld or delayed Fountainhead has undertaken in the transaction agreement to distribute to Fountainhead unitholders the Redefine consideration shares, and for practical purposes, pursuant to such distribution and Redefine s obligation to issue the Redefine consideration shares, the Redefine consideration shares will be issued directly to Fountainhead unitholders recorded as such in the register on the record date for receipt of the Redefine consideration shares concerned, in settlement by Fountainhead of such distribution.

5 3.14. In terms of the transaction agreement the parties are obliged to take such steps as may be required for the winding up of Fountainhead and for Fountainhead, as part of the winding up and following the transaction, to distribute to Fountainhead unitholders the Redefine consideration shares in accordance with the Board Notice 42 of 2014 of CISCA (the Notice ), as soon as practicably possible after the granting of approvals contemplated in paragraph 4 below, on the basis that the distribution of the Redefine consideration shares will be effective on the Redefine consideration shares issue date, and Redefine will, as a practical measure, on the Redefine consideration shares issue date, issue the Redefine consideration shares directly to Fountainhead unitholders in settlement of such distribution, such that each Fountainhead unitholder will be issued the Redefine consideration shares, subject to the rounding principle Redefine will cause application to be made to the JSE at the appropriate time for the listing of the Redefine consideration shares on the JSE with effect from the Redefine consideration shares issue date and will use its best endeavours to ensure that such listing is granted. The parties will not implement the transaction unless and until the JSE has approved such listing. 4. CONDITIONS PRECEDENT The transaction is subject to the fulfilment of the following conditions precedent by 31 August 2014 or such later date as determined in accordance with the transaction agreement: 4.1. the Registrar approving the transaction and making such determinations and giving such approvals and directions, including any applicable approvals required in terms of sections 102 and 103 of CISCA and an approval of any requisite amendments to the Fountainhead deed as required for it to be legally permissible to implement the transaction Fountainhead unitholders, in a general meeting and/or by ballot, as may be required ( Fountainhead general meeting ), approving all resolutions in the notice of the Fountainhead general meeting and providing such approvals (including an approval for any requisite amendments to the Fountainhead deed) as necessary to implement the transaction on the terms and conditions contained in the transaction agreement, including but not limited to: an ordinary resolution for the approval of the transaction as a "category 1 transaction" in terms of the JSE Listings Requirements (requiring the support of more than 50% of the total number of votes exercisable by Fountainhead unitholders, other than Redefine and its associates, present in person or by proxy, at the Fountainhead general meeting); and an ordinary resolution for the approval of the termination of the listing of Fountainhead units on the JSE and for the winding up of Fountainhead (requiring the support of at least 75% of the total number of votes exercisable by Fountainhead unitholders, other than Redefine and its associates, present in person or by proxy, at the Fountainhead general meeting) Redefine shareholders in a general meeting ( Redefine general meeting ), approving all such resolutions as may be required to implement the transaction on the terms and conditions contained in the transaction agreement, including but not limited to an ordinary resolution to authorise the board of directors of Redefine to issue the Redefine consideration shares (requiring the support of more than 50% of the total number of votes exercisable by Redefine shareholders, present in person or by proxy, at the Redefine general meeting).

6 5. CATEGORISATION OF THE TRANSACTION FOR FOUNTAINHEAD, RELATED PARTY CONSIDERATIONS AND FURTHER DOCUMENTATION 5.1. From a Fountainhead perspective, the transaction constitutes a category 1 disposal in terms of the JSE Listings Requirements and as such requires the approval of Fountainhead unitholders. Accordingly, a circular to Fountainhead unitholders (the Fountainhead circular ), incorporating a notice of general meeting for the Fountainhead general meeting will be issued in due course As Redefine is a material unitholder in Fountainhead and the sole shareholder of FPTML, the transaction is, from a Fountainhead perspective, being treated as a disposal to a related party under the JSE Listings Requirements requiring: the provision of a fairness opinion by an independent expert acceptable to the JSE. In this regard the independent committee have appointed Questco Proprietary Limited (the independent expert ) to furnish the requisite fairness opinion; a statement by the independent committee confirming whether the transaction is fair insofar as Fountainhead unitholders are concerned; and Fountainhead unitholder approval at the general meeting, as outlined in paragraph 4.2 above As required in terms of the JSE Listings Requirements, the independent expert has concluded that the transaction is fair to Fountainhead unitholders which opinion will be contained in the Fountainhead circular The independent committee hereby confirms that it has considered, inter alia, the fairness opinion and is of the opinion that the transaction is fair insofar as unitholders are concerned and intends to vote in favour of the resolutions necessary to implement the transaction and recommends that Fountainhead unitholders vote in favour of the resolutions necessary to implement the transaction Redefine and its subsidiaries will own approximately 65.9% of Fountainhead s issued units prior to the implementation of the transaction. Although Redefine and its associates will be taken into account in determining a quorum at the Fountainhead general meeting, the votes of Redefine and its associates will not be taken into account in determining the validity of the resolution authorising the transaction. 6. CATEGORISATION OF THE TRANSACTION FOR REDEFINE AND FURTHER DOCUMENTATION From a Redefine perspective, the transaction constitutes a category 2 transaction in terms of the JSE Listings Requirements and accordingly does not require approval by Redefine shareholders. However, shareholder approval will be required to approve all such resolutions as may be required to implement the transaction, on the terms and conditions contained in the transaction agreement, as outlined in paragraph 4.3 above. In this regard, a notice for the Redefine general meeting will be issued in due course. 7. PROPERTY INFORMATION 7.1. As further detailed in paragraph 7.5 below, the Fountainhead property portfolio, which includes two properties in the process of being transferred, was independently valued at R and comprises 66 properties with a gross lettable area ( GLA ) of m 2. The Fountainhead property portfolio is concentrated significantly in retail properties representing approximately 73% percent of

7 the Fountainhead property portfolio by value The Fountainhead retail property portfolio was valued by Trevor King from Old Mutual Investment Group Proprietary Limited ( OMIG ), a registered independent property valuer The Fountainhead office and industrial property portfolio was valued by Roger Long from Jones Lang LaSalle Proprietary Limited ( JLL ), Karen Scott from Rode & Associates Proprietary Limited ( Rode ), Theunis Behrens from Real Insight Proprietary Limited ( Real Insight ), Roger Hunting from Broll Valuation and Advisory Services Proprietary Limited ( Broll ) and Claire Everatt from Eris Property Group Proprietary Limited ( Eris ), who are all registered independent property valuers acceptable to the JSE Detailed valuation reports have been prepared in respect of each of the properties comprising the Fountainhead property portfolio. A summary of the valuation reports in respect of the Fountainhead retail property portfolio and the Fountainhead industrial property portfolio will be included in the Fountainhead circular Details of the properties comprising the Fountainhead property portfolio are set out in the table below: No. Property name 1. Centurion Mall (75%) 2. Westgate Shopping Centre (41.32%)* 3. The Boulders Shopping Centre 4. Benmore Gardens Shopping Centre 5. Bryanston Shopping Centre 6. The Brightwater Commons 7. Southgate Mall (15.97%)* Physical address Heuwel Avenue, Centurion Ontdekkers Road, Roodepoort Old Pretoria Road, Midrand Benmore Road, Sandton Hobart Road, Bryanston Republic Road, Randburg Rifle Range Road, Mondeor Geographic location Sector Weighted average rental per (m 2 ) as per Fountainhead s records GLA (m 2 ) attributed by Fountainhead Value attributed by the independent property valuer as at 28 February 2014 Disposal price as per the transaction agreement Independent property valuer Gauteng Retail R R R OMIG Gauteng Retail R R R * Gauteng Retail R R R OMIG Gauteng Retail R R R OMIG Gauteng Retail R R R OMIG Gauteng Retail R R R OMIG Gauteng Retail R R R * 8. Rosebank Mews 173 Oxford Road, Rosebank 9. Dekema Mall Dekema Road, Wadeville, Germiston Gauteng Retail R R R OMIG Gauteng Retail R R R JLL 10. Southgate Value Market (19.01%)* Rifle Range Road, Mondeor Gauteng Retail R R R * 11. Kenilworth Centre Doncaster Road, Kenilworth 12. N1 City Mall (58%) Louwtjie Rothman Street, Goodwood 13. Blue Route Mall Tokai Road, Tokai, Cape Town Western Cape Retail R R R OMIG Western Cape Retail R R R OMIG Western Cape Retail R R R OMIG 14. Douglas Roberts Centre 15. Constantia Kloof 3 (80 %) 22 Skeen Boulevard, Bedfordview 3 Florida, Florida, Gauteng, 1709 Gauteng Office R R R Broll Gauteng Office R R R Broll Middel Street 300 Middel Street, Nieuw Muckleneuk 17. Rosebank Corner Jan Smuts Avenue, Rosebank Gauteng Office R R R Real Insight Gauteng Office R R R Eris 18. Grayston Ridge Office 144 Katherine Street, Sandown, Sandton Gauteng Office R R R Eris

8 No. Property name Physical address Geographic location Sector Weighted average rental per (m 2 ) as per Fountainhead s records GLA (m 2 ) attributed by Fountainhead Value attributed by the independent property valuer as at 28 February 2014 Disposal price as per the transaction agreement Independent property valuer 19. Dunkeld Office 6 North Road, Dunkeld West 20. AMR Office Concorde Road, Bedfordview Pybus Road 2 Pybus Road, Sandton Gauteng Office R R R Eris Gauteng Office R R R Broll Gauteng Office R R R Eris 22. Kimberley-Clark House Leicester Road, Bedford Gardens Gauteng Office R R R Broll Walker Street Sunnyside, Pretoria Walker Street Sunnyside, Pretoria 25. The Ambridge Vrede Avenue, Epsom Downs 26. Yellowwood House 33 Ballyclare Drive, Bryanston 27. Sunridge (75%) 62 Wierda Road East, Wierda Valley 28. Summit 439 Summit Road, Morningside 29. Lakeside Place Queen Street, Bruma Kent Avenue 256 Kent Avenue, Randburg Gauteng Office R R R Real Insight Gauteng Office R R R Real Insight Gauteng Office R R R Real Insight Gauteng Office R R R Eris Gauteng Office R R R Eris Gauteng Office R R R Eris Gauteng Office R R R JLL Gauteng Office R R R Eris 31. Continuity SA (Nashua House) Old Pretoria Main Road, Midrand, Gauteng, 1685 Gauteng Industrial R R R Rode 32. RPA Centre 180 Smith Street, Fairland Gauteng Office R R R JLL The Boulevard Westway, Durban 34. Delmat House 28 Jan Hofmeyr Road, Westville KwaZulu Natal KwaZulu Natal Office R R R Broll Office R R R Broll 35. CIB Insurance 15E Riley Road, Bedfordview, Ext 28 Gauteng Office R R R Broll 36. Kent House 1 Neptune Road, Berea West, Westville KwaZulu Natal Office R R R Broll 37. Mifa Industrial 399 George Street, cnr 16th Road, Midrand Gauteng Industrial R R R Rode 38. Strijdom Industrial 39. Supreme Industrial Hammer Avenue, Strijdompark, Randburg Klipriviers-berg Road, Steeledale Gauteng Industrial R R R Rode Gauteng Industrial R R R Rode 40. Cedarwood House Ballyclare Drive, Bryanston 41. Jupiter Ext. 1 Nasmith Road, Jupiter Ext. 1, Germiston 42. Vodacom Midrand th Road, Midrand 43. Delta Old Pretoria Road, Midrand Gauteng Office R R R Eris Gauteng Industrial R R R Rode Gauteng Industrial R R R Rode Gauteng Industrial R R R Rode 44. Gateway Industrial Graniet Street, Jet Gauteng Industrial R R R Rode 45. Dismed House 733/747 16th Road, Midrand 46. Strike House Richards Drive, Halfway House Gauteng Industrial R R R Rode Gauteng Industrial R R R Rode 47. Canberra Industrial Derick Coetzee Street, Jet Gauteng Industrial R R R Rode

9 No. Property name Physical address Geographic location Sector Weighted average rental per (m 2 ) as per Fountainhead s records GLA (m 2 ) attributed by Fountainhead Value attributed by the independent property valuer as at 28 February 2014 Disposal price as per the transaction agreement Independent property valuer 48. The House Of Rubber Crusher Road, Crown Extension Gauteng Industrial R R R Rode 49. Jay Piet Bekker Street, Jet 50. Humsa House Graniet Street, Jet 51. Monit House Van der Bijl Stre et, Meadowdale 52. Astro Place Van der Bijl Stre et, Meadowdale Gauteng Industrial R R R Rode Gauteng Industrial R R R Rode Gauteng Industrial R R R Rode Gauteng Industrial R R R Rode 53. Staceylee Industrial Derick Coetzee Street, Jet Gauteng Industrial R R R Rode 54. Mercury Piet Bekker Street, Jet 55. Lifetime House Kelly Road, Jet 56. Orion Place Piet Bekker Street, Jet 57. Dale House Cnr Bell and Flemming Streets, Meadowdale Gauteng Industrial R R R Rode Gauteng Industrial R R R Rode Gauteng Industrial R R R Rode Gauteng Industrial R R R Rode 58. Ventura Industrial Derick Coetzee Street, Jet Gauteng Industrial R R R Rode 59. Hydra Piet Bekker Street, Jet 60. Gail Industrial Patrick Road, Jet 61. Precision House Precision Road, Kya Sand Gauteng Industrial R R R Rode Gauteng Industrial R R R Rode Gauteng Industrial R R R Rode 62. Murrayfield Prospecton Road, Prospecton KwaZulu Natal Industrial R R R Broll 63. Bedford Gardens Private Hospital Leicester Road, Bedford Gardens Gauteng Specialised R R R Broll 64. Southern Sun O.R. Tambo International Airport 65. Kenilworth Motor Dealership (Pending)^ 66. Robor Industrial (Pending)^ Kempton Gauteng Industrial R R R JLL Cr Chichester and Loch Roads, Kenilworth 233 Barbara Road, Germiston Western Cape Industrial R R R Eris Gauteng Industrial R R R JLL Total R R *Westgate Shopping Centre, Southgate Mall and Southgate Value Market have not been valued by an independent property valuer as these properties are in the process of being disposed and transferred out of the Fountainhead property portfolio. The values of these properties are based on the disposal prices in terms of the concluded sale agreements. ^ These properties are in the process of being transferred to Fountainhead. 8. FINANCIAL EFFECTS OF THE TRANSACTION ON A FOUNTAINHEAD UNITHOLDER AND ON FOUNTAINHEAD 8.1. Set out in the table in paragraph 8.3 below, are the pro forma financial effects for a Fountainhead unitholder taking into account the consideration ratio The pro forma financial effects on a Fountainhead unitholder have been calculated in respect of 1 (one) Fountainhead unit held before implementation of the transaction and 0.82 of a Redefine linked unit held after implementation of the transaction The pro forma financial effects for a Fountainhead unitholder are as follows:

10 NAV per unit (excluding deferred tax and noncontrolling interest) (cents) NTAV per unit (excluding deferred tax and noncontrolling interest) (cents) Fountainhead unitholder before 1 Redefine shareholder after 2,3 Percentage Change (%) (15.99) Headline earnings per unit (cents) (13.41) Earnings per unit (cents) Distribution per unit (cents) Actual number of units in issue (`000) Weighted average number of units in issue (`000) Notes and assumptions: 1. The financial information in the Fountainhead unitholder before column has been extracted, without adjustment, from the unaudited interim results of Fountainhead for the six months ended 28 February 2014 published on 10 April The financial information in the Redefine shareholder after column has been based on the unaudited group results of Redefine for the six months ended 28 February 2014 published on 8 May 2014 after adjusting for the following: a) The issue of Redefine consideration shares to existing Fountainhead unitholders (other than Redefine or its subsidiaries) at a price of R9.51 (being the 30 day volume weighted average traded price prior to the date of signature of the transaction agreement). b) The reversal of a non-controlling interest of R324 million in the statement of comprehensive income and the reversal of the non-controlling interest of R2.966 billion in the statement of financial position. c) An amount of R126 million, being the consideration premium in excess of Fountainhead s net asset value relating to non-controlling interests, has been deducted against reserves in terms of IFRS 3: Business Combinations. d) Transaction costs are assumed to be approximately R7.34 million and have been capitalised in full. e) With the exception of the adjustment set out in note 2d) above, all adjustments are expected to have a continuing effect. 3. The per unit financial information has been derived by taking the after financial effects for Redefine as detailed in notes 2a) to 2e) above and multiplying these by the consideration ratio to provide the pro forma financial effects for a Fountainhead unitholder The pro forma statement of financial position and the pro forma statement of comprehensive income of Fountainhead, after implementation of the transaction, based on the published interim financial results of Fountainhead for the six months ended 28 February 2014, will be set out in the Fountainhead circular Set out in the table in paragraph 8.8 below are the pro forma financial effects of the transaction on Fountainhead. The pro forma financial effects are based on the published interim financial results of Fountainhead for the six month ended 28 February The pro forma financial effects have not been reviewed or reported on by an independent reporting accountant or by Fountainhead s external auditor The pro forma financial effects are the responsibility of the board of directors of FPTML. The pro forma financial effects have been prepared for illustrative purposes only to illustrate the effects on

11 Fountainhead s financial position, changes in equity, results of operations and cash flows subsequent to the transaction and due to its nature may not fairly present Fountainhead s financial position, changes in equity, results of operations and cash flows after implementation of the transaction The pro forma financial effects of the transaction on Fountainhead are as follows: Before the transaction Pro forma after the transaction Percentage Change (%) Net asset value ( NAV ) per unit (excluding (100) deferred tax and non-controlling interest) (cents) Net tangible asset value ( NTAV ) per unit (100) (excluding deferred tax and non-controlling interest) (cents) Headline earnings per unit (cents) (100) Earnings per unit (cents) (100) Distribution per unit (cents) (100) Actual number of units in issue (`000) Weighted average number of units in issue (`000) Notes and assumptions: 1. The numbers set out in the Before the transaction column have been extracted, without adjustment, from Fountainhead s published interim results for the six months ended 28 February It is assumed that the transaction will be implemented on 1 September 2013 for purposes of the statement of comprehensive income and therefore Fountainhead would not have earned any rental income or incurred any operational expenses for the period and accordingly all statement of comprehensive income items have been reversed. 3. It is assumed that the transaction will be implemented on 28 February 2014 for statement of financial position purposes. 4. In terms of the transaction, Fountainhead will dispose of all of its assets including its entire property portfolio. 5. In terms of the transaction, Redefine will assume all of Fountainhead s liabilities including Fountainhead s interest-bearing borrowings together with any interest rate swaps. 6. The value of the Redefine consideration shares to be issued by Redefine to Fountainhead unitholders as consideration for all of Fountainhead s assets including the Fountainhead property portfolio is assumed to be R9.13 billion. 7. It is assumed that a profit of R369 million will be realised from the transaction being the consideration premium to the Fountainhead net asset value. 8. In terms of the transaction the consideration shares will be distributed to Fountainhead unitholders. 9. All adjustments are assumed to have continuing effect. 9. FINANCIAL EFFECTS OF THE TRANSACTION ON REDEFINE 9.1. Set out in the table in paragraph 9.4 below are the pro forma financial effects of the transaction on Redefine. The pro forma financial effects are based on the published interim financial results of Redefine for the six months ended 28 February The pro forma financial effects have not been reviewed or reported on by an independent reporting accountant or Redefine s external auditor.

12 9.3. The pro forma financial effects are the responsibility of the board of directors of Redefine. The pro forma financial effects has been prepared for illustrative purposes only to illustrate the effects on Redefine s financial position, changes in equity, results of operations and cash flows subsequent to the transaction and due to its nature may not fairly present Redefine s financial position, changes in equity, results of operations and cash flows after implementation of the transaction The pro forma financial effects of the transaction on Redefine are as follows: Before the transaction Pro forma after the transaction Percentage Change (%) NAV per linked unit/share (excluding deferred tax (0.12) and non-controlling interest) (cents) NTAV per linked unit/share (excluding deferred tax and non-controlling interest) (cents) Headline earnings per linked unit/share (cents) Earnings per linked unit/share (cents) Distribution per linked unit/share (cents) (0.27) Actual number of linked units in issue /shares(`000) Weighted average number of linked units/shares in issue (`000) The notes and assumptions for Redefine s pro forma financial effects are the same as those set out in note 2 for the pro forma financial effects on a Fountainhead unitholder presented above. 10. WITHDRAWAL OF FOUNTAINHEAD CAUTIONARY ANNOUNCEMENT Following the release of this joint transaction announcement, the Fountainhead cautionary announcement published on SENS on 18 June 2014 is withdrawn and caution is no longer required to be exercised by Fountainhead unitholders when dealing in their Fountainhead units. 11. FOUNTAINHEAD RESPONSIBILITY STATEMENT To the extent that the information in this joint transaction announcement relates to Fountainhead, the independent committee accepts responsibility for such information and confirms that, to the best of the respective knowledge and belief of the members of the independent committee, the information is true and does not omit anything likely to affect the importance of the information included. 12. REDEFINE RESPONSIBILITY STATEMENT To the extent that the information in this joint transaction announcement relates to Redefine, Redefine s board of directors accepts responsibility for such information and confirms that, to the best of the respective knowledge and belief of the members of the Redefine board of directors, the information is true and does not omit anything likely to affect the importance of the information included. 4 July 2014

13 Corporate advisor and sponsor to Redefine Sponsor to Fountainhead Java Capital Legal advisor to Redefine Cliffe Dekker Hofmeyr Financial advisor and independent transaction sponsor to Fountainhead Rand Merchant Bank Legal advisor to the independent committee Bowman Gilgillan Tax advisor Edward Nathan Sonnenbergs Independent expert Questco