ELLIES HOLDINGS LIMITED - Proposed acquisition of property from Vegtu Investments Proprietary Limited

Proposed acquisition of property from Vegtu Investments Proprietary Limited

ELLIES HOLDINGS LIMITED
(Incorporated in the Republic of South Africa)
(Registration number: 2007/007084/06)
JSE code: ELI ISIN: ZAE000103081
(“Ellies” or the “company”)


PROPOSED ACQUISITION OF PROPERTY FROM VEGTU INVESTMENTS PROPRIETARY LIMITED


INTRODUCTION

Shareholders are advised that Ellies Properties Proprietary Limited (“Ellies Properties”), a wholly-owned
subsidiary of Ellies, has concluded an agreement with Vegtu Investments Proprietary Limited (“Vegtu”), for
the acquisition of the properties situated at:

    - ERF 319 Village Deep Township Registration Division IR, the Province of Gauteng, held under Deed
      of Transfer number T5776/2002;

    - ERF 194 Village Deep Township Registration Division IR, the Province of Gauteng, held under Deed
      of Transfer number T5776/2002, and

    - ERF 196 Village Deep Township Registration Division IR, the Province of Gauteng, held under Deed
      of Transfer number T5776/2002,

(collectively “the property”), together with the business conducted by Vegtu, being the leasing of the
buildings situated on the property (“the acquisition”).

RATIONALE FOR THE ACQUISITION

During October 2010, Ellies advised shareholders that the company had implemented an investment strategy
to acquire the operating premises used by Ellies countrywide and, where appropriate, upgrade those
premises. Ellies anticipated that, over time, the resultant capitalisation of property and the value growth
would deliver sound returns. The property is considered by Ellies to be a strategic property, as it houses the
current manufacturing facilities of the consumer goods and services division.

TERMS OF THE ACQUISITION

The purchase price payable by Ellies Properties to Vegtu is R39 000 000.00, which includes VAT at zero
percent as the property is being sold as a going concern due to the leasing of the buildings situated on the
property.

The purchase price will remain outstanding as a loan by Vegtu to Ellies Properties, which loan will be
secured by the registration of a mortgage bond over the property by Ellies Properties in favour of Vegtu for
an amount of R39 000 000.00 together with an additional sum of R3 900 000.00, which additional sum will
be utilised by Ellies Properties for the payment of, inter alia, insurance premiums, stand licences, rates and
taxes, water and electricity, sewerage and other costs and charges due to the government, provincial and
local authorities. Accrued interest raised on the loan will be settled monthly in arrears and capital
repayments will be made from time to time, based on the cash flows of the Ellies Properties. The loan shall
be paid in full within ten years from the date of registration of the mortgage bond.

The effective date of the acquisition will be the date of registration of the transfer of the property into Ellies
Properties’ name, expected to be on or around 7 August 2013.

There are no outstanding suspensive conditions for the acquisition.

CATEGORISATION OF THE ACQUISITION AND RELATED PARTY CONSIDERATIONS

The acquisition is not categorisable as either a category 1 or category 2 transaction in terms of the Listings
Requirements of the JSE Limited however, as Elliot Salkow, the executive Chairman of Ellies, is a director
of Vegtu as well as a trustee of the sole shareholder of Vegtu, The Ellie Salkow Family Trust, the
acquisition constitutes a “small related party transaction” in terms of section 10.7 of the JSE Listings
Requirements.

A small related party transaction is not subject to shareholder approval, provided an independent expert has
confirmed that the terms of the acquisition are fair as far as shareholders are concerned. The board of Ellies
has appointed PKF Corporate Finance Proprietary Limited (“PKF”) to provide the board with a fairness
opinion regarding the acquisition. PKF have concluded that the acquisition is fair and a copy of the fairness
opinion is available at the registered offices of the company (94 Eloff Street Ext., Village Deep,
Johannesburg, 2001) from 27 June 2013 until 25 July 2013.

FINANCIAL INFORMATION

The value attributed to the property is the purchase price of R39 000 000.00 and the after tax profits
attributable to the property are R523 000.00. The impact of the acquisition on Ellies net asset value, net
tangible asset value, earnings and headline earnings per share are not significant (less than 3%) and therefore
have not been disclosed.


27 June 2013


Sponsor
Java Capital

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