CSG HOLDINGS LIMITED - Acquisition and cautionary announcement

Acquisition and cautionary announcement

CSG HOLDINGS LIMITED
(Formerly M&S Holdings Limited)
(Incorporated in the Republic of South Africa)
(Registration number: 2006/011359/06)
Share code: CSG
ISIN code: ZAE000184438
("CSG" or "the Company")

ACQUISITION OF A FURTHER 49% INTEREST IN SIGNIFICANT SITE SERVICES (PROPRIETARY)
LIMITED (“SSS (SA)”) AND SIGNIFICANT SITE SERVICES MOZAMBIQUE LIMITADA (“SSS
MOZAMBIQUE”) (COLLECTIVELY “THE ENTITIES”) AND CAUTIONARY ANNOUNCEMENT

1.     Introduction

       Shareholders are advised that the Company has entered into a heads of agreement
       with Mr Danie Engelbrecht representing the sellers of the Entities, Messrs Danie
       Engelbrecht, Louis Jones, Cilliers De Kock, Chris Meyer and Paul Olivier
       (“Agreement”). In terms of the Agreement CSG Holdings will acquire a further 49% in
       each of SSS (SA) and SSS (Mozambique) (“Acquisition”). The CSG group currently
       holds an effective 41.28% in the Entities and following the Acquisition will hold an
       effective 90.28% in the Entities. Detailed terms of the Agreement will be recorded in
       further separate full agreements (“Full Agreements”).

2.     Nature of business of SSS (SA) and SSS Mozambique

       The Entities construct and maintain remote site villages with the main activity being
       the management of these facilities. These facilities are currently located in
       Mozambique, Malawi, Zambia and South Africa.

3.     Rationale for the Acquisition

       The Company has a comprehensive understanding of the Entities’ operations
       through its existing effective holding of 41.28% in each of the Entities and believes
       that the integration of a further 49% of the Entities would be seamless. Further, the
       Company believes that the management of the Entities has excellent capabilities and
       expertise.

       The advantage of the Entities is that currently in excess of 80% of revenue is earned
       in the Southern African countries of Mozambique, Malawi and Zambia. Margins in
       these remote areas are higher than margins obtained in the South African market.
       Investments in the mining industry and infrastructure development in the
       abovementioned countries are in the pipeline, and the directors are of the opinion
       that with their strong foothold in these countries, they are well positioned to secure
       further contracts.

4.   Consideration for the Acquisition

     The aggregate purchase consideration for the Acquisition amounts to R61 238 433
     being R48 288 583 for a further 49% interest in SSS (SA) and R12 949 850 for a
     further 49% interest in SSS Mozambique. The purchase consideration will be settled
     through a cash payment of R4 000 000 with the remainder to be settled by the issue
     of new CSG shares. The number of CSG shares to be issued will be determined based
     on the volume weighted average price of CSG shares traded on the exchange
     operated by JSE Limited 30 days prior to the date on which the Full Agreements are
     entered into. Shareholders will be advised in due course of the number of new CSG
     shares to be issued pursuant to the Acquisition. The new CSG shares will be issued ex
     any dividend declared by CSG for the 13 months ended 31 March 2014.

5.   Conditions precedent

     The Acquisition is subject to inter alia:
     -      CSG board approval; and
     -      the audited annual financial statements of the Entities for the 13 months
            ended 31 March 2014 reflecting a profit after tax of at least R24.4 million.

6.   Effective date

     The Acquisition will be effective following the fulfilment of the conditions precedent
     set out in paragraph 5 above.

7.   Unaudited pro forma financial effects

     The unaudited pro forma financial effects of the Acquisition on CSG’s earnings per
     share, headline earnings per share, net asset value per share and net tangible asset
     value per share will be provided in a further announcement in due course.

8.   Categorisation

     Based on current share price information, the Acquisition is a Category 2 transaction
     in terms of the JSE Limited Listings Requirements (“Listings Requirements”).
     Shareholders will be informed of the final categorisation once the Full Agreements
     have been entered into.

9.   Memorandum of incorporation (“MOI”)

     Following the implementation of the Acquisition, the Entities will become
     subsidiaries of the Company. CSG will ensure that the provisions of the MOI of each
     of the Entities will not frustrate the Company in any way from compliance with the
     obligations of the Listings Requirements.

10.  Cautionary announcement

     Shareholders are advised to exercise caution when trading in CSG securities until a
     further announcement regarding the unaudited pro forma financial effects of the
     Acquisition and further details of the Acquisition are published.

Johannesburg

23 June 2014

Sasfin Capital
(a division of Sasfin Bank Limited)

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