REPLY DOCUMENT TO THE SHAREHOLDERS OF ATLANTIC LEAF

Transcription

1 Document issued under Rule 18 of the Securities (Takeover) Rules 2010, in reply to the Offer Document issued by Vukile to the shareholders of Atlantic Leaf on Friday, 3 November 2017, relating to the Offer by Vukile to the shareholders of Atlantic Leaf to purchase their shares in Atlantic Leaf for a cash consideration of R17.60 per share. THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION The definitions and interpretations commencing on page 1 of this document apply, mutatis mutandis, throughout this Reply Document, including on this front cover. If you are in any doubt about any aspect of the Offer, you should consult your broker, banker, legal advisor, accountant or other professional advisor immediately. The shareholders of Atlantic Leaf registered as such during the period commencing from the date of the issue of the Offer Document until Friday, 8 December 2017 will be entitled to accept the Offer. The last day to trade in Atlantic Leaf shares in order to participate in the Offer is Tuesday, 5 December 2017 and the last day for acceptance of the Offer is Friday, 8 December 2017 at 12:00 South African time (14:00 Mauritian time). This Reply Document is being issued to shareholders of Atlantic Leaf to enable them to take an informed decision regarding the Offer by Vukile. Action required Atlantic Leaf shareholders are referred to page 1 of the Offer Document, which sets out the action required by them. Atlantic Leaf Properties Limited (Incorporated in the Republic of Mauritius) (Registration number: C1/GBL) Having its address at Level 3, Alexander House 35 Cybercity, Ebéne, 72201, Mauritius SEM share code: ALPL.N0000 JSE share code: ALP ISIN: MU0422N00009 ( Atlantic Leaf or the Company ) REPLY DOCUMENT TO THE SHAREHOLDERS OF ATLANTIC LEAF relating to: an unconditional Offer by Vukile to acquire all of the ordinary shares in Atlantic Leaf not already owned by Vukile for a cash purchase consideration of R17.60 per Atlantic Leaf share held. JSE sponsor to Atlantic Leaf SEM authorised representative and sponsor and Mauritian transaction advisor Date of issue: 24 November 2017 This document is only available in English and is available on Atlantic Leaf s website ( Copies may be obtained from the registered offices of Atlantic Leaf, whose registered address is set out in the Corporate Information section of this document during normal business hours from the date of issue of this document.

2 CORPORATE INFORMATION Registered office and postal address of the company c/o Intercontinental Trust Limited Level 3, Alexander House 35 Cybercity, Ebéne, Mauritius (Postal address same as physical address) JSE sponsor Java Capital 2nd Floor 6A Sandown Valley Crescent Sandton, 2196 Republic of South Africa (PO Box 2087, Parklands, 2121, South Africa) SA transfer secretaries Computershare Investor Services Proprietary Limited Rosebank Towers 15 Biermann Avenue Rosebank, 2196 South Africa (PO Box 61051, Marshalltown, 2107) Company secretary Intercontinental Trust Limited Level 3, Alexander House 35 Cybercity, Ebéne, Mauritius (Postal address same as physical address) SEM authorised representative and sponsor and Mauritian transaction advisor Perigeum Capital Ltd Level 4, Alexander House 35 Cybercity, Ebéne Mauritius (Postal address same as physical address) Mauritian registrar and transfer agent Intercontinental Secretarial Services Limited Level 3, Alexander House 35 Cybercity, Ebéne, Mauritius (Postal address same as physical address) DISCLAIMER This Reply Document has been prepared in compliance with the laws of Mauritius and sets out the terms of the Offer made by Vukile and recommendations from the Board of the Company and the Independent Adviser appointed by Atlantic Leaf. DOCUMENTS AVAILABLE FOR INSPECTION The original of this Reply Document is available for inspection during normal business hours at the registered office of Atlantic Leaf (which address is set out in the Corporate Information section of this document).

3 DEFINITIONS In this reply document the words and expressions shall bear the following meanings except where the context otherwise requires: Adviser CDS FSC FY JSE Offer Offer Document Offeror or Vukile Offeree or the Company or Atlantic Leaf Reply Document Independent adviser appointed under Rule 21 of the Rules Central Depository & Settlement Co. Limited Financial Services Commission of Mauritius Financial Year JSE Limited Mandatory offer from the Offeror Document dated Friday, 3 November 2017 issued by the Offeror Vukile Property Fund Limited Atlantic Leaf Properties Limited Rules Securities (Takeover) Rules 2010 SEM This Document issued by Atlantic Leaf Properties Limited including annexures, pursuant to Rule 18 of the Rules Stock Exchange of Mauritius Limited 1

4 TABLE OF CONTENTS Corporate information Page Inside front cover Definitions 1 1. Introduction 3 2. Views of Board of Atlantic Leaf 4 A. Summary of Adviser s report 4 (1) Methodology 4 (2) Valuation by the Adviser 4 (3) Independent advice on the Offer 4 B. Recommendation of directors on the Offer 5 3. Directors interests in the Offeree and Offeror 5 A. Atlantic Leaf's directors interests in the Company 5 B. Atlantic Leaf's directors interests in Vukile 6 C. Dealings by directors in shares of Atlantic Leaf 6 4. Shareholdings in Vukile 6 5. Stated capital of the Offeree 6 6. Financial information 7 A. Audited financial statements 7 B. Material changes 9 C. Interim statements 9 D. Accounting policies Material contracts Arrangements affecting directors Directors service agreements Directors statement 11 Annexure A Salient terms of the property service agreement 12 Annexure B Interim statements issued by Atlantic Leaf as required under section 5(a)(iii) of Second Schedule (Rule 18) 14 2

5 1. INTRODUCTION Further to the subscription on Wednesday, 20 September 2017 by Vukile of new shares in Atlantic Leaf at a price of R17.60 per share ( new subscription of shares ), the board of directors ( the Board or the Directors ) of Atlantic Leaf was notified on Wednesday, 20 September 2017 by Vukile of its firm intention to make an Offer to the shareholders of Atlantic Leaf to acquire all the voting shares, not already held by Vukile, at a price of R17.60 per share (the Offer Price ). Following the new subscription of shares, the details of the Offeror s shareholding in Atlantic Leaf are as illustrated below: Before new subscription of shares After new subscription of shares Number of voting shares held in Atlantic Leaf by Vukile Percentage of the issued share capital Number of voting shares held in Atlantic Leaf by Vukile Percentage of the issued share capital As a result of the new subscription of shares, the Offeror has acquired effective control of Atlantic Leaf as per Rule 33(1)(b) of the Rules. Effective control is defined under the Rules as the holding of securities by any person, either individually or together with a person acting in concert, which will result in that person, either individually or together with a person acting in concert, having the right to exercise, or control the exercise of, more than 30 per cent of the rights attached to the voting shares of the company. The acquisition of effective control triggers the application of Rule 33(2) of the Rules, whereby, if a person, either individually or together with a person acting in concert, acquires effective control of a company, that person is obliged to make an Offer in accordance with the Rules, on all voting shares of the Offeree not already held by the Offeror. The Offer Price is determined according to Rule 14(2) of the Rules which stipulates that the offer price shall be the sum of any premium and of the highest of: (a) the price paid by the offeror or a person acting in concert for any acquisition during the six months preceding the date of public announcement; (b) the price paid by the offeror under a preferential allotment made to him or to a person acting in concert at any time during the 12 months period up to the date of closure of the Offer; or (c) the average of the weekly high and low of the closing prices of the shares of the offeree as listed on the securities exchange where the shares of the offeree are most frequently traded during the six months preceding the date of the public announcement. The board of directors of Vukile has further confirmed in their letter of firm intention that: sufficient financial resources are available to Vukile to satisfy the acceptance of the Offer in full; the Offer opens at 09:00 on Friday, 3 November 2017 and closes at 12:00 on Friday, 8 December 2017, both days inclusive; Vukile is acting alone and as principal in relation to the Offer and Vukile is not and has not at any time been acting with any person in concert to obtain or consolidate effective control of Atlantic Leaf; Other than the irrevocable undertakings obtained by Vukile from various shareholders of Atlantic Leaf as announced by Vukile on Wednesday, 20 September 2017, no agreement exists with Vukile (or any person acting in concert with Vukile) in relation to Atlantic Leaf shares; the Offer will not be subject to any conditions that relate to acceptances of the Offer; and the Offer Price has been determined by Vukile in line with Rule 14(2) of the Rules. On Friday, 3 November 2017, Vukile submitted an Offer Document to the shareholders of Atlantic Leaf followed by a notification to the Directors of the Company, as per Rule 17 of the Rules. In this context and in line with Rule 18 of the Rules, the Board of Atlantic Leaf is hereby communicating to its shareholders by way of a Reply Document to enable them to reach an informed decision about the Offer. The Reply Document is being sent only to the shareholders registered on the share register of Atlantic Leaf at close of business on Friday, 3 November 2017 and to whom the Offer Document was addressed. If you have since sold or otherwise transferred your shares in Atlantic Leaf or any part of them, to a third party, the Offer would not be applicable to you if you were not registered as a shareholder at 12:00 South African time (14:00 Mauritian time) on Friday, 8 December

6 This Reply Document may contain certain forward-looking statements. These statements involve risk and uncertainties that may cause actual results to differ materially from those suggested by them. Undue reliance should not be placed on such statements which are being made as of the date of this document. This Reply Document should not be read or otherwise construed as investment advice. If you are in any doubt about the Reply Document or its contents or what action you should take, you are recommended to seek financial advice in that respect. 2. VIEWS OF THE BOARD OF ATLANTIC LEAF In being informed of the firm intention of the Offeror to make an Offer for all voting shares not already held by themselves, the Board has duly noted that: Vukile was under a legal obligation to do so; the Offer price was determined by Vukile in accordance with the pricing mechanism as set out in Rule 14(2) of the Rules; and the Offer price of R17.60 per share is based on the price paid for the new subscription of shares. Pursuant to Rule 21 of the Rules, the Board of Atlantic Leaf appointed KPMG Advisory Services Limited, Mauritius ( KPMG ) as Independent Adviser to: carry out a valuation of Atlantic Leaf share; and advise the Board of Atlantic Leaf as to whether the Offer is fair and reasonable. A. Summary of Adviser s report (1) Methodology KPMG performed a valuation of Atlantic Leaf to determine whether the Offer consideration for each of its shares is fair and reasonable to the shareholders of Atlantic Leaf. KPMG have performed their valuation of Atlantic Leaf on a minority marketable basis given that the shares of Atlantic Leaf are listed on the SEM and JSE, and the Offeror has made an Offer to the shareholders of Atlantic Leaf. KPMG has considered the business of Atlantic Leaf, its subsidiaries and its portfolio of assets. In so doing, they have applied an asset-based methodology for the valuation of the Company. In arriving at its conclusion, KPMG has relied on a number of sources of information which included but were not limited to: integrated annual report 2017; abridged unaudited management accounts dated 31 August 2017; latest property valuation reports; mark-to-market reports in respect of listed investments and financial derivatives; publicly available market information; and discussions with management. The valuation report is available for inspection at the registered office of Atlantic Leaf, c/o Intercontinental Trust Limited, Level 3, Alexander House, 35 Cybercity, Ebéne 72201, Mauritius, upon request by any shareholder of Atlantic Leaf or by any person authorised in writing by a shareholder. (2) Valuation by the Adviser KPMG has determined that the value of a share in Atlantic Leaf was (3) Independent advice on the Offer Based upon the valuation performed, KPMG is of the opinion that the Offer as set out in the Offer Document, is not fair and reasonable to the shareholders of the Company because the Offer price of R17.60 per share represents a discount of 11.6% to the estimated fair value per share of R19.91*. * The fair value in ZAR equivalent has been arrived at based on the conversion rate (Wednesday, 8 November 2017) of R18.71/1.00 (source: Bloomberg). 4

7 B. Recommendation of the directors on the Offer The Adviser submitted its report to the Board of the Company on 8 November The Board has given due consideration to the report of the Adviser for the purposes of reaching its own opinion regarding the Offer and the Offer consideration. After taking into account the report of the Adviser, and the terms of the Offer, the Board recommends to Atlantic Leaf shareholders to not accept the Offer. The Board of Atlantic Leaf reached this conclusion on the basis of the following: The accelerated book build undertaken by Atlantic Leaf which resulted in the Offeror acquiring the new subscription shares at a price of R17.60/1.015 per share was based on the conversion rate of R17.34/1.00, determined on 13 September 2017; The Offer represents a discount to the fair value per share of the Company as determined by KPMG (1.064); The share price on the JSE, quoted in Rand, was trading at R19.70 on 8 November 2017, which is well above the Offer Price of R17.60; The indicative Offer price as at Wednesday, 8 November 2017 is using a conversion exchange rate of R18.71/1.00, which is below the value per share determined by KPMG; and The Company has good long-term fundamentals supporting its primary objective to provide attractive returns to investors, through long-term investments in quality real estate assets which have sound property fundamentals and stable contracted income underpinned by long leases, strong tenants and low interest rates on its borrowings ensuring the Company s ability to pay dividends. The portfolio is defensively positioned with a weighted average unexpired lease term of 11.3 years. All tenants are up to date with their rental obligations and the portfolio has no vacancies. The Directors of Atlantic Leaf whose names appear in section 4 of this document and who hold shares of the Offeree directly and/or indirectly, will not accept the Offer. The Directors decision has been arrived at after consideration of the advice from the Adviser and their report as detailed above. The decision leading to the recommendation above, was approved by way of a Board resolution dated 21 November Mr Laurence Rapp, being the CEO of the Offeror and holder of 0.44 % of the issued share capital of Vukile, recused himself from deliberations and voting on this matter. The decision of the Directors is based on the view of the business as at the date of this Reply Document and the Directors of Atlantic Leaf jointly and severally accept full responsibility for the accuracy of the information contained in this Reply Document. After having made all reasonable enquiries, the directors state that, to the best of their knowledge, opinions expressed in the present Reply Document have been arrived at after due and careful consideration and there are no material facts the omission of which would make any statement herein, whether of fact or opinion misleading. 3. DIRECTORS INTERESTS IN THE OFFEREE AND OFFEROR A. Atlantic Leaf s directors interests in the company The following directors of Atlantic Leaf hold shares in the Company as at the date of issue of this document. Director Direct interest Indirect interest Total interest Peter Bacon 0.13% 0.13% Nicholas Winearls 0.02% 0.02% Cleopatra Folkes Rudolf Pretorius Kesaven Moothoosamy Paul Leaf-Wright 0.01% 1.37% 1.38% Warren Morton 0.04% 0.02% 0.06% Laurence Rapp 0.09% 0.02% 0.11% Total 0.28% 1.41% 1.69% 5

8 B. Atlantic Leaf s directors interests in Vukile The following directors of Atlantic Leaf hold shares in the Offeror as at the date of issue of this document. Director Direct holding in the Offeror Indirect holding in the Offeror Total percentage Holding Laurence Rapp Paul Leaf-Wright Total C. Dealings by directors in shares of Atlantic Leaf The following directors of Atlantic Leaf or their associates have dealt in the shares of the Company within the six months prior to the public announcement of the Offer, released on 20 September Director Date of transaction Number of shares acquired (by associates) Total value (ZAR) Paul Leaf-Wright 8 May Paul Leaf-Wright 22 May Warren Morton 9 May SHAREHOLDINGS IN VUKILE Neither Atlantic Leaf nor any of its subsidiaries:- (a) hold any shares in the Offeror as at the date of issue of this document; and (b) have purchased or sold shares in the Offeror within the six months before the public announcement of the Offer, released on 20 September STATED CAPITAL OF THE OFFEREE The stated capital of the Company as at 28 February 2017 is as follows: Stated capital Issued shares ordinary no par value shares Total The stated capital of the Company as at 30 September 2017 (i.e. post the issue of the new shares on 20 September 2017) is as follows: Stated capital Issued shares ordinary no par value shares Total The stated capital of the Offeree consists of ordinary no par value shares and having attached to them the following rights: (a) The right to one vote on a poll at a meeting of the Company on any resolution, in person or by proxy. (b) The right to an equal share in dividends authorised by the Board. (c) The right to an equal share in the distribution of the surplus assets of the Company. Since the end of its last financial year, being 28 February 2017, Atlantic Leaf has issued new shares at a price of per share on the Mauritian register and R17.60 per share on the South African register. 6

9 6. FINANCIAL INFORMATION A. Audited financial statements STATEMENT OF FINANCIAL POSITION Group Audited Group Audited Group Audited As at As at As at 28 Feb Feb Feb 2015 ASSETS Non-current assets Investment properties Investment in subsidiaries Listed investments Loan receivable Loan to subsidiaries Deposit paid for acquisition of subsidiaries Other receivable Current assets Trade and other receivables Cash and cash equivalents Total assets Equity and liabilities Equity Share capital Cash flow hedge reserve ( ) ( ) Retained earnings Liabilities Non-current liabilities Long-term borrowings Current liabilities Trade and other payables Current portion of long-term borrowings Tax payable Derivative financial instruments Total equity and liabilities

10 STATEMENT OF COMPREHENSIVE INCOME Group Group Group Audited Audited Audited as at as at as at 28 Feb Feb Feb 2015 Rental revenue Straight-line lease income adjustment Revenue Property operating expenses ( ) ( ) Other operating expenditure ( ) ( ) ( ) Operating income ( ) Other income Investment income Profit on disposal of investment property Profit/(loss) on foreign exchange ( ) Fair value adjustments ( ) Finance costs ( ) ( ) Profit before taxation Taxation ( ) ( ) (9 042) Profit for the year Other comprehensive income Items that will be reclassified subsequently to profit or loss Fair value movement on interest rate swaps (97 316) ( ) Total comprehensive income for the year Add back: Fair value movement on interest rate swaps Basic earnings Less: Fair value adjustments to investment properties ( ) Gain on bargain purchase (42 500) Profit on disposal of investment property ( ) Headline earnings Add back: Straight-line lease adjustments ( ) ( ) Gain on bargain purchase Adjusted for one-off costs Listing and advisory fees Transaction costs Foreign exchange loss on equity raised Fair value loss on cash flow hedges transferred Adjusted headline earnings/distributable earning

11 STATEMENT OF CASH FLOWS Group Group Group Audited as at Audited as at Audited as at 28 Feb Feb Feb 2015 Net cash from/(utilised in) operating activities ( ) ( ) Net cash utilised in investing activities ( ) ( ) ( ) Net cash utilised from financing activities Increase in cash and cash equivalents ( ) Cash and cash equivalents at beginning of the year Effects of exchange difference on cash and cash equivalents ( ) Cash and cash equivalents at end of year STATEMENT OF CHANGES IN EQUITY Cash flow Stated Retained hedge capital earnings reserve Total Balance at 1 March Profit for the year Dividends Issue of shares (net of transaction costs) Other comprehensive income Balance at 28 February Profit for the year Dividends ( ) ( ) Issue of shares (net of transaction costs) Other comprehensive income ( ) ( ) Balance at 28 February ( ) Profit for the year Dividends ( ) ( ) Issue of shares (net of transaction costs) Other comprehensive income (97 316) (97 316) Balance at 28 February ( ) Copies of the full version of the audited financial statements of Atlantic Leaf for the last three financial years are available on demand at the registered office of Atlantic Leaf and on the Company s website. B. Material changes Save for the acquisition of 45.02% of the units in LMP Retail Warehouse JV Property Unit Trust which holds a portfolio of 11 DFS Trading Limited furniture retail warehouse and industrial properties in the United Kingdom (as announced to the market on 12 September 2017) and the issue of shares undertaken by Atlantic Leaf in September 2017, there have been no material changes in the financial or trading position or prospects of Atlantic Leaf subsequent to the last published audited accounts. C. Interim statements All interim statements made by Atlantic Leaf since the last published audited accounts are included in Annexure B. 9

12 D. Accounting policies The significant accounting policies are included in the audited accounts of the Company referred to in sub-section A above. There has been no change in the accounting policies of Atlantic Leaf since the last financial year-end. 7. MATERIAL CONTRACTS Other than contracts entered into in the ordinary course of business, the property service agreement with Martial Eagle Limited is the only contract entered into by the Company since its incorporation: (i) which is or may be material or (ii) which contains any provision in terms of which the Company has any obligations or entitlements which are, or may be material, as at the date of issue of this document. Property service agreement In March 2014, Atlantic Leaf entered into a property service agreement with an external service provider, Martial Eagle Limited (Registration number C1/GBL), an entity incorporated in Mauritius ( Martial Eagle or the property service provider ). The property service agreement regulates the undertakings between the property service provider and the Company, in terms of which the property service provider will provide certain services in relation to the Company s property investments in return for a fee payable by the Company or a nominated subsidiary. Martial Eagle provides on an exclusive basis the investment and property advisory services to the Company. The property service provider management team has considerable expertise in property and structured finance. The property service provider does not provide any advisory services to any other listed property entities. The property service provider is responsible for, inter alia: (a) rendering support services in relation to the strategic decisions of the Company including but not limited to, maintaining shareholder relationships, supporting capital raising initiatives of the Company and providing support to the Board of the Company; (b) managing the portfolio of properties of the Company, including but not limited to: assisting with the identification of suitable properties for acquisition by the Group and the execution of transactions approved by the Investment Committee; maximising the return from the Property Portfolio; and managing any appointed property administrators, (c) managing the operations of the Company including but not limited to, financial accounting, treasury management, risk and compliance, board and statutory reporting; (d) procuring the rendering of the Property Administration Services by the Property Administrators. The property service provider or the Company may in turn contract the services of similar service providing companies which have specialist skills or knowledge within a particular jurisdiction that the Company intends investing in. The salient terms of the property service agreement are detailed in Annexure A. 8. ARRANGEMENTS AFFECTING DIRECTORS Atlantic Leaf does not anticipate any payment of benefit to its directors as compensation for loss of office in connection with the Offer. There is no agreement between any director of Atlantic Leaf and any other person that is conditional on the outcome of the Offer or otherwise is connected with the Offer. There are no material contracts entered into by Vukile in which a director of Atlantic Leaf has any interest. 9. DIRECTORS SERVICE AGREEMENTS Atlantic Leaf or its subsidiaries do not have any service agreements with its directors which have more than 12 months to terminate, or which have been entered into or amended within six months before the public announcement of the Offer, released on 20 September Messrs Paul Leaf-Wright and Warren Morton are not remunerated by the Company directly for their roles as executive directors. Their services are provided for by the property service agreement with the property service provider. 10

13 There are no further existing or proposed contracts (whether written or oral) relating to directors or managerial remuneration, restraint payments, royalties or secretarial and technical fees. 10. DIRECTORS STATEMENT The Board of Atlantic Leaf accepts full responsibility for the correctness of the information contained in this Reply Document, and having made all reasonable enquiries, states that, to the best of its knowledge and belief, there are no material facts, the omission of which would make any statement herein, whether of fact or opinion, misleading. The directors of Atlantic Leaf have been guided by KPMG, the independent adviser appointed as per the Rules. [24] November 2017 Signed for and on behalf of the Board of Atlantic Leaf Paul Leaf-Wright 11

14 ANNEXURE A Salient terms of the Property Service Agreement The property service agreement contains terms and conditions customary for an agreement of its nature. Key terms of the property service agreement are outlined below. 1. Property services fee: A monthly fee of 0.50% of the gross value of the company s property portfolio at the end of each calendar month, divided by 12. The property services fee shall be payable to the property service provider monthly in arrears, together with any applicable VAT thereon. 2. Capital raising fee: None payable to the property service provider in terms of the property service agreement. Market-related and payable to third parties only. In terms of the property service agreement, the property service provider is not precluded from being mandated for such work, subject to a separate agreement. 3. Transaction fees: To the extent that the property service provider assists the company, at its request, in relation to any acquisition, disposal, transfer, restructuring or similar transaction in respect of any properties or any other assets of the company or its subsidiaries, a transaction fee of 0.50% of the gross value of the property portfolio shall be payable up to a maximum of which shall only be payable for if the gross value of the company s property portfolio is less than 500 million. 4. Development fee: The property service provider shall not be precluded from being appointed by the company and be paid a development fee to oversee or manage any new developments or significant refurbishments being undertaken by or on behalf of the company. Such appointment will be at an arm's length basis and subject to approval by the board. 5. Reimbursement costs: On presentation of the relevant proof of payment together with supporting documentation, the property service provider is entitled to reimbursement if the following expenses are incurred: property administration fees, accounting, tax, audit, property valuation, legal, corporate advisory, company secretarial, administration, compliance, incorporation and listings, utility administration, transfer, secretarial and trustee fees, advertising costs, marketing, bank charges in respect of the operation of the company s bank accounts, costs associated with maintaining any security structures set up in connection with the company s external borrowings, insurance costs in respect of the assets of the company and professional indemnity costs in respect of the directors of the company and non-executive directors remuneration incurred by or on behalf of the company and any other expenses, whether or not listed above, which have been included in the company s annual budget or any revision thereof, including such other expenses which are reasonably required to be incurred in connection with the administration and operation of the company and its property portfolio. 6. Performance fees: None. 7. Incentive: In lieu of performance fees, the property service provider will be entitled to subscribe for shares in the company up to 5% of the company s shares in issue, which subscription may be funded by the company. The property service agreement provides for a comprehensive agreement regulating the terms of such subscriptions and funding to be concluded. Accordingly, a Facility Agreement has been entered into between the company, the property service provider, and Atlantic Property Investments Limited on 25 February 2015 regulating such terms. Key terms of the Facility Agreement are detailed further below. 8. Agreement duration: The agreement will remain in force from the date of signature and continue for a period of 10 (ten) years ( initial term ). Following the initial term, the agreement may be renewed for further five-year periods on the same terms and conditions, and subject to the Termination provisions detailed below. Any such renewal of the agreement must be approved by an ordinary resolution of disinterested shareholders. 9. Internalisation: There is no internalisation mechanism currently provided for in the property service agreement. 12

15 10. Termination: Shareholders have the right, in a general meeting called by them or held by the company, to cancel the property services agreement at any time before its expiry date, subject to a majority of the votes cast by shareholders (excluding any parties or their associates who are party to or have an interest in the property services agreement) in favour thereof. Further, Atlantic Leaf and/or its directors cannot so enter into, or renew the property services agreement without a majority of the votes cast by securities holders (excluding any parties or their associates who are party to, or have an interest in, the agreement). 11. Termination fee: The termination fee contemplated in the termination clause above will be equivalent to the net present value of the property services fee (as set out in paragraph 1 above) for a period of three months from the date of termination of the property services agreement. Such net present value will be calculated using a discount rate equivalent to the prevailing repurchase rate of the Bank of Mauritius. In the event of any dispute regarding the termination fee, the termination fee will be determined by an independent expert. 13

16 ANNEXURE B Interim statements issued by Atlantic Leaf as required under Section 5(a)(iii) of Second Schedule (Rule 18) ABRIDGED UNAUDITED FINANCIAL STATEMENTS FOR THE THREE MONTHS ENDED 31 MAY 2017 DIRECTORS COMMENTARY Atlantic Leaf presents its results for the three months ended 31 May QUARTERLY RESULTS Assets under management remained unchanged in the quarter under review generating an average yield of 7.3%. Gearing also remained unchanged at 50% Loan to Value (LTV) and the average cost of debt was 3.2%. The weighted average adjusted headline earnings per share in the quarter of 2.31 pence per share were slightly ahead of management s forecast and in line with the previous year (2016: 2.34 pence per share). EARNINGS On 15 May 2017 the Company paid the final dividend of 4.3 pence per share for the year ended 28 February 2017, bringing the annual distribution to 8.5 pence per share. The payment of the dividend has the effect of reducing reserves and hence the Net Asset Value (NAV) per share at reporting date now stands at 1.07 per share. DIVIDENDS PAID On 15 May 2017 the company paid the final dividend of 4.3 pence per share for the year ended 28 February 2017, bringing the annual distribution to 8.5 pence per share. The payment of the dividend has the effect of reducing reserves and hence the NAV per share which at reporting date now stands at 1.07 per share. ANNUAL GENERAL MEETING The company held its Annual General Meeting of shareholders on 29 June 2017, and all resolutions were passed. COMPANY OUTLOOK Whilst Brexit continues to create an uncertain outlook for the UK economy, the commercial property market has remained strong benefitting from a weaker sterling and buoyant demand. The Company s management team has well progressed with a number of acquisition opportunities that will further diversify the Company s asset base and contribute to the continued and sustainable growth in distributions to shareholders. The Company remains on track to achieve a distribution of 9.00 pence per share for the full year to 28 February 2018 representing an increase of 6% over the previous year. This forecast has not been reviewed or reported on by the Company s auditors. Atlantic Leaf has primary listings both on the Official Market of the Stock Exchange of Mauritius Ltd ( SEM ) and on the Main Board of the JSE Limited. There have been no changes to the board of directors of the Company (the Board ) since the release of the audited financial statements for the year ended 28 February By order of the Board Intercontinental Trust Limited Company Secretary 11 July

17 STATEMENT OF FINANCIAL POSITION Group Group Group Unaudited Unaudited Audited as at as at as at 31 May May Feb 2017 ASSETS Non-current assets Investment properties Listed investments Loan receivable Other receivable Current assets Trade and other receivables Cash and cash equivalents Total assets Equity and liabilities Equity Share capital Cash flow hedge reserve ( ) ( ) ( ) Retained earnings Liabilities Non-current liabilities Long-term borrowings Current liabilities Trade and other payables Current portion of long-term borrowings Tax payable Derivative financial instruments Total equity and liabilities Number of shares in issue Net asset value per share () Net asset value per share excluding cash flow hedge reserve

18 STATEMENT OF CHANGES IN EQUITY Stated Capital Retained Earnings Cash flow hedge reserve Total Balance at 1 March ( ) Profit for the year Dividends ( ) ( ) Issue of shares (net of transaction costs) Other comprehensive income (97 316) (97 316) Balance at 28 February ( ) Profit for the period Dividends ( ) ( ) Issue of shares (net of transaction costs) Other comprehensive income Balance at 31 May ( )

19 STATEMENT OF CASH FLOWS Group Group Group Unaudited Unaudited Audited Quarter ended Quarter ended Year ended 31 May May February 2017 Cash generated from operations Interest received Finance costs ( ) ( ) ( ) Tax paid (2 473) ( ) ( ) Net cash from/(utilised in) operating activities Cash flows from investing activities Acquisition of investment properties ( ) ( ) Sale of investment property Sale of listed investments Dividends received Loan to APIL Net cash utilised in investing activities ( ) ( ) Cash flow from financing activities Proceeds from issue of shares Proceeds from borrowings Repayment of borrowings ( ) ( ) ( ) Dividends paid ( ) ( ) ( ) Net cash utilised from financing activities ( ) Increase in cash and cash equivalents ( ) ( ) Cash and cash equivalents at beginning of the year Effects of exchange difference on cash and cash equivalents Cash and cash equivalents at end of year

20 RECONCILIATION OF BASIC EARNINGS TO DISTRIBUTABLE EARNINGS Group Unaudited Quarter ended 31 May 2017 Group Unaudited Quarter ended 31 May 2016 Group Audited Year ended 28 February 2017 Basic earnings Less: Fair value adjustments to investment properties Profit on disposal of investment property ( ) Headline earnings Add back: Straight line lease adjustments ( ) ( ) ( ) Adjusted for once-off costs Transaction costs Fair value loss on cash flow hedges transferred Adjusted headline earnings/distributable earnings Weighted average number of shares in issue Basic and diluted earnings per share ( pence) Basic and diluted headline earnings per share ( pence) Adjusted headline earnings per share ( pence) Interim dividend Final dividend Total dividend Interim dividend per share ( pence) 4.20 Final dividend per share ( pence) 4.30 Total dividend per share ( pence)

21 SEGMENTAL REPORTING THREE MONTHS ENDED 31 MAY 2017 Retail Industrial Office Warehouse Unallocated Total Statement of profit or loss Revenue Profit on disposal of investments Fair value adjustments ( ) ( ) Interest expense ( ) ( ) (25 323) ( ) Income tax ( ) (92 674) (17 441) (14 751) ( ) Adjusted headline earnings ( ) Statement of financial position Additions to investment property Total assets Total borrowings SEGMENTAL REPORTING THREE MONTHS ENDED 31 MAY 2016 Retail Industrial Office Warehouse Unallocated Total Statement of profit or loss Revenue Profit on disposal of investments Fair value adjustments ( ) ( ) Interest expense ( ) ( ) (33 181) ( ) Income tax ( ) ( ) (5 387) (4 623) ( ) Adjusted headline earnings ( ) Statement of financial position Additions to investment property Total assets Total borrowings

22 STATEMENT OF COMPREHENSIVE INCOME Group Group Group Unaudited Unaudited Audited Quarter ended Quarter ended year ended 31 May May February 2017 Rental revenue Straight-line lease income adjustment Revenue Property operating expenses ( ) ( ) ( ) Other operating expenditure ( ) ( ) ( ) Operating income Other income Investment income Profit on disposal of investment property Profit on foreign exchange Fair value adjustments ( ) ( ) ( ) Finance costs ( ) ( ) ( ) Profit before taxation Taxation ( ) ( ) ( ) Profit for the period Other comprehensive income Items that will be reclassified subsequently to profit or loss Fair value movement on interest rate swaps (97 316) Total comprehensive income for the period

23 RELATED PARTY TRANSACTIONS Per the Property Services Agreement, fees for the quarter paid to Martial Eagle Limited amounted to 379,714 (2016: 322,942). NOTES The Company is required to publish financial results for the three months ended 31 May 2017 in terms of Listing Rule of the SEM. The abridged unaudited financial statements for the three months ended 31 May 2017 ( financial statements ) have been prepared in accordance with the framework concepts and the measurement and recognition requirements of International Financial Reporting Standards ( IFRS ), the requirements of the SAICA Financial Reporting Guides as issued by the Accounting Practice Committee, the SEM Listing Rules, the Securities Act of Mauritius 2005, the JSE Listings Requirements and contains the information required by IAS 34: Interim Financial Reporting. The accounting policies and methods of computation adopted in the preparation of these financial statements are in terms of IFRS and consistent with those applied in the preparation of the audited financial statements for the year ended 28 February These financial statements were approved by the Board on 11 July The financial statements have not been reviewed or reported on by the Company s external auditors. Copies of the abridged unaudited financial statements for the three months ended 31 May 2017 and the Statement of direct and indirect interests of each officer of the Company, pursuant to Rule 8(2)(m) of the Securities (Disclosure Obligations of Reporting Issuers) Rules 2007 of Mauritius, are available free of charge, upon request at the Registered Office of the Company at c/o Intercontinental Trust Limited, Level 3, Alexander House, 35 Cybercity, Ebene 72201, Mauritius. Contact person: Mrs Smitha Algoo. This communique is issued pursuant to SEM Listing Rules 11.3 and and section 88 of the Securities Act of Mauritius The Board accepts full responsibility for the accuracy of the information contained in these financial statements and this announcement. The Directors have disclosed all matters or circumstances arising subsequent to the period ended 31 May 2017 that require any additional disclosure or adjustment to the financial statements. JSE sponsor South African corporate advisor Java Capital Leaf Capital Company secretary SEM authorised representative and sponsor Intercontinental Trust Limited Perigeum Capital Ltd

24 ABRIDGED UNAUDITED FINANCIAL STATEMENTS FOR THE THREE AND SIX MONTHS ENDED 31 AUGUST 2017 AND DECLARATION OF 4.5 PENCE DIVIDEND DIRECTORS COMMENTARY The Company s results for the six months ended 31 August 2017 are in line with the guidance given to shareholders at the time of the announcement relating to the DFS transaction released on 12 September 2017 and as further detailed below. Adjusted headline earnings per share of 2.19 pence per share (2016: 2.24 pence) was similar to the prior period due to limited lease escalations during the review period. The Company however has declared an interim dividend of 4.5 pence per share (2016: 4.2 pence), up 7% from the previous year. The results are reflective of the stable environment in which the Company operates. Our properties remain 100% occupied and the leases are backed by tenants with strong covenants. The results for the six months ended 31 August 2017 as compared with the six months ending 31 August 2016 can be summarised as follows: 31 August August 2017 Assets Under Management ( million) % Total Rental Revenue ( million) % Adjusted HEPS ( pence per share) (1%) Total Distribution ( pence per share) % GEARING Atlantic Leaf has a target Loan-to-value ( LTV ) ratio of 50% with LTV at 31 August 2017 of 50.3% and given the long-term nature of the leases it has in place, management is comfortable with the LTV level combined with the benefit of the overall cost of debt of approximately 3.2% per annum. Currently, 76% of Atlantic Leaf s debt has been hedged with interest rate swaps. DIVIDENDS DECLARED The Board of Atlantic Leaf is pleased to announce an interim dividend of 4.5 pence per share for the six months ended 31 August Further information regarding the interim dividend, including salient dates and exchange rates, will be announced in due course on or around 31 October PROSPECTS As announced on 12 September 2017, the Company is expecting to achieve the forecasted full year distribution of 9.1 pence per share, which would represent a 7.1% increase on the prior year. This forecast is based on the current portfolio, the investment of the surplus cash and no material change in market conditions. This forecast has not been reviewed by the external auditors. The UK commercial property sector remains very active despite the uncertainty around BREXIT. Demand is strong and the Company is confident that it will be successful in continuing to grow its property assets under management which now exceed 350 million (2016: 264 million). The strong forward property yield of 7.3% on our portfolio is underpinned by high quality commercial and industrial properties in excellent regional locations throughout the United Kingdom with long term leases from high quality tenants. SUBSEQUENT EVENTS Post the reporting period and as announced on 12 September 2017, the Company entered into an agreement to acquire 45% of a portfolio of eleven properties tenanted by DFS Trading Limited, in a joint venture with LMP Retail Warehouse JV Holdings Limited. The equity contribution of the Company of 24.8 million including acquisition costs was financed by a very successful accelerated book build on 20 September 2017 in which the Company issued new shares, raising 47 million. Management is evaluating further acquisition opportunities that meet the Company s investment criteria and it is expected that the balance of the cash will be deployed in the short to medium term. The Company has also invested in a portfolio of listed REIT s which provide good dividend income. 22