COGNITION HOLDINGS LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1997/010640/06)
Share code: CGN           ISIN: ZAE000197042
 (“Cognition” or “the company”)


DETAILED CAUTIONARY ANNOUNCEMENT: PROPOSED DISPOSAL OF MAJORITY
INTEREST IN PRIVATE PROPERTY SOUTH AFRICA PROPRIETARY LIMITED
(“Private Property”)


1.      INTRODUCTION
        Further to the cautionary announcement released by Cognition on Wednesday,
        3 August 2022, shareholders are advised that the company has entered into
        separate agreements dated 12 August 2022 (“the Signature Date”), constituting
        one indivisible transaction, with BetterHome Group Limited (“BetterHome’), ooba
        Proprietary Limited ("ooba”) and Fledge Capital Proprietary Limited (“Fledge”)
        (collectively, “the Purchasers”) in terms of which it will, subject inter alia to the
        conditions precedent referred to in paragraph 5 below, dispose of its 50,01%
        interest in Private Property (“the Sale Shares” and “the Disposal”). Full details of
        the Disposal are set out in this announcement.


2.      RATIONALE FOR THE DISPOSAL
        The business of Cognition has been subjected to a vigorous reassessment
        process following the restructuring of the management team at the end of
        December 2021. The existing businesses of FoneWorx and BMI have been
        refocused and aligned with the identified needs of their respective customer
        bases.


        At the same time, Private Property has also interrogated its priorities and business
        imperatives and has resolved to commit greater investment to future growth
        prospects and in its long-term upstream and downstream markets, serviced by its
        web-based platform. This will require an allocation of considerable additional
        resources in technology and marketing.


        In the process of the above review, it has become apparent to the company that
        its investment in Private Property may benefit from a more industry-aligned
        shareholder base which supports the imperatives of growth as opposed to short
        term returns, and which can accelerate the implementation of Private Property’s
     revised strategy. In the circumstances, the offer to acquire Cognition’s
     shareholding in Private Property represents an opportunity for the company to
     return significant value to shareholders.


3.   DETAILS OF THE DISPOSAL
     3.1     Cognition will dispose of the Sale Shares to the Purchasers for an amount
             of R150 000 000, payable in cash on delivery of the share certificates and
             other relevant documentation relating to the Sale Shares to the
             Purchasers.
     3.2     The effective date of the Disposal is expected to be on or about
             16 November 2022.
     3.3     The agreements governing the Disposal contain limited warranties that
             are usually found in agreements regarding transactions of this nature.
     3.4     The proceeds of the Disposal will be added to the existing cash reserves
             of the company, pending decisions as to effective utilisation of such
             funds.


4.   CLASSIFICATION AND CATEGORISATION OF THE DISPOSAL
     4.1     As the Disposal constitutes the disposal of the greater part of the assets
             and undertaking of the company, it is classified as an “affected
             transaction” in accordance with the provisions of the Takeover Law
             contained in the Companies Act, 2008 (“the Code”).
     4.2     The Code inter alia requires the appointment of an independent board to
             oversee the Disposal process, and an independent expert to prepare a
             report on the Disposal for the shareholders, as well as approval of the
             Disposal by the shareholders of the company in general meeting, by way
             of a special resolution requiring a 75% majority vote.
     4.3     In addition, the Disposal is categorised as a Category 1 transaction in
             terms of the Listings Requirements of the Johannesburg Stock Exchange
             (“the JSE”) and therefore similarly requires approval by the shareholders
             in general meeting, by way of an ordinary resolution requiring a 50% plus
             majority vote.


5.   CONDITIONS PRECEDENT
     The Disposal is subject inter alia to the following conditions precedent:
     5.1     within 35 days of the Signature Date, the provision by the Purchasers of
             unconditional and irrevocable proof of funds to implement the Disposal to
             the satisfaction of the Takeover Regulation Panel (“the TRP”);
     5.2     the completion of the pre-emptive rights process contained in the existing
             shareholders’ agreement between the shareholders of Private Property,
             and triggered by the Disposal;
     5.3     the approval of the Disposal by the shareholders of the company in
             general meeting as indicated in paragraph 4 above; and
     5.4     the issue by the TRP of a certificate of compliance in respect of the
             Disposal in accordance with the Code.


6.   FINANCIAL INFORMATION
     As at 30 June 2022, being the last financial year end of Private Property, the net
     asset value of Private Property was R49,6 million. The profit after tax for the
     period amounted to R10,2 million, of which 50,01% is attributable to Cognition.


     The financial information was prepared in accordance with full IFRS and extracted
     from the draft reviewed provisional results of the company for the year ended
     30 June 2022, which are expected to be released on or about 1 September 2022.
     These draft results formed the basis for the trading statement released by the
     company on Friday, 5 August 2022.


     The financial information is subject to the outcome of the audit for the year, which
     is currently being finalised by BDO South Africa Inc., the auditors to the company,
     and which audited results are expected to be published on or about
     30 September 2022.


7.   CIRCULAR TO SHAREHOLDERS
     A circular to shareholders convening the general meeting of shareholders of the
     company required to implement the Disposal will be despatched to shareholders
     within the applicable time frames of the Code and the Listings Requirements. The
     circular will include the report referred to in paragraph 4 above, as well as the
     notice of the general meeting at which shareholders will be asked to approve the
     Disposal.


8.   CONTINUATION OF CAUTIONARY ANNOUNCEMENT
          Shareholders are advised that, while this announcement complies with the
          Listings Requirements, it falls short of a Firm Intention Announcement as required
          by the Code, and they are therefore urged to continue to exercise caution when
          dealing in their shares pending further announcements regarding implementation
          of the Disposal.

9.        RESPONSIBILITY STATEMENT

          The board of directors of the company accepts responsibility for the information
          contained in this announcement, and certify that, to the best of their respective
          knowledge and belief, the information is true and, where appropriate, this
          announcement does not omit anything likely to affect the importance of the
          information included.


By order of the board.
Johannesburg
26 August 2022


Sponsor                                  Auditors and reporting accountants   Attorneys
AcaciaCap Advisors Proprietary Limited   BDO South Africa Inc.                Fluxmans Inc.