LABAT AFRICA LIMITED - Voluntary Announcement of the Acquisition of Cannafrica (Pty) Limited

Voluntary Announcement of the Acquisition of Cannafrica (Pty) Limited

LABAT AFRICA LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1986/001616/06)
(“Labat Africa” or “the Company”)
ISIN Code: ZAE 000018354 Share code: LAB

VOLUNTARY ANNOUNCEMENT OF THE ACQUISITION OF CANNAFRICA (PTY) LTD (“CANNAFRICA”)

1)    Introduction
      Shareholders are referred to the previous announcements in 2019 related to establishment of a fully
      integrated cannabis business within the Labat Group of companies known as Labat Healthcare.
      Shareholders are advised that Labat Africa, as part of its business expansion, has concluded the
      various agreements or is establishing new operations, together with the forward-looking financial
      information of the businesses going forward. The Labat Healthcare Business is a subsidiary of Labat
      Africa. Labat Healthcare consists of the following subsidiaries:

      o     Labat Pharmaceuticals;
      o     Labat Botanicals;
      o     Labat Intellectual Property; and
      o     Labat Hemp Processing

2)    Update on previously announced transactions
      Labat has announced a number of transactions in line with its repositioning strategy over the past
      18 months as well as its entry into the cannabis and hemp market. To this end Labat is pleased to
      advise shareholders that the agreements with for the acquisition of Pac-Con and The Highly Creative
      have been concluded and the shares have been issued.

3)    The Terms of the CannAfrica Acquisition
      In terms of a sale of business and assets agreement, Labat Africa will acquire a 70% interest in a
      business to be known as CannAfrica for a consideration of R15 million to be settled through the
      issue of 15 million ordinary Labat Africa shares at an issue price of R1.00 per share. The remaining
      30% will be owned by Mr Herschel Maarsdorp.

      The parties have agreed to appoint Mr Herschel Maasdorp as the CEO of the Retail Division of
      Labat Healthcare.

4)    Rationale for the CannAfrica Acquisition
      The CannAfrica agreement is in line with the strategy to expand the Labat Healthcare business and
      further entrench their position in the cannabis market in Southern Africa. CannAfrica is an
      established and fully integrated cannabis business offering:

      o     Education & Training Programmes, aligned to the South African Qualifications Authority (SAQA)
            and the National Qualifications Framework (NQF), ranging from:
            •   Primary and secondary agriculture qualifications focussing on the skills, knowledge and
                values that are required in Cannabis Production, Cannabis Processing, Quality Assurance
                as well as entry level pharmaceutical manufacturing competencies
            •   Programmes provide learners with the opportunity to gain competence in Cannabis
                production and will facilitate their securing employment in the industry
      o     Research & Development supported by:
            •   Academic Research capability
            •   Simulator Assisted & Applied Research for Social Impact studies

      o     Fully integrated CBD Lifestyle & Retail offering for Labat to enter the market across a number of
            categories including:
            •    Beverages
            •    Edibles
            •    Home Care & Personal Care
            •    Pet Care
            •    Supplements
            •    Health Care
            •    Confectionary
            •    Luxury Tea

      In the coming months, the rollout of Labat Healthcare retail stores will be fully enabled and
      supported by a data driven approach including e-commerce and digital platforms. The full
      product range will be manufactured locally in the recently acquired pharmaceutical facility, Pac-
      Con, that is fully licenced, SAHPRA approved and in compliance with GMP principles.

5)    Suspensive Conditions of the Acquisition
      The CannAfrica Acquisition is subject to the remaining suspensive conditions:

      o   The Board providing a certified extract of the Board resolution approving the CannAfrica
          acquisition.
      o   Mr Herschel Maarsdorp entering into a voting pool agreement for the benefit of Labat Africa
          Limited.
      o   The issue and listing of the shares for the CannAfrica Acquisition.

6)    Classification of the Transaction
      The acquisition of CannAfrica falls below 5% of the market capitalisation in terms of the JSE Listings
      Requirements. None of the CannAfrica parties and/or their associates are related parties to Labat
      as defined in the JSE Listings Requirements. Accordingly, the announcement is made on a voluntary
      basis and does not include the financial information required for a Category 2 announcement.

JOHANNESBURG
23 January 2020

Sponsor
Arbor Capital Sponsors Proprietary Limited

Date: 23-01-2020 11:10:00
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