Torre - Amendment to the TGS earn-out consideration TORRE INDUSTRIES LIMITED Incorporated in the Republic of South Africa (Registration number: 2012/144604/06) Share code: TOR ISIN: ZAE000188629 (“Torre” or “the Company” or “the Group”) AMENDMENT TO THE TGS EARN-OUT CONSIDERATION 1. INTRODUCTION AND BACKGROUND Torre shareholders are referred to the SENS announcement dated 5 April 2013 which detailed the transaction terms in relation to Torre’s acquisition of 100% of Tractor and Grader Supplies (Pty) Ltd ("TGS") (“TGS Acquisition SENS”). Capitalised terms used in this SENS will bear the same meanings provided in the TGS Acquisition SENS. Torre has negotiated certain proposed amendments to the terms of the Acquisition Agreement (which agreement was approved by Torre shareholders at a general meeting held on 13 June 2013). These proposed amendments will allow the Company to settle 50% of the Second Earn-out Consideration earlier than originally proposed and on preferential terms to the Company (“the Amendment”). 2. ORIGINAL TERMS In summary, the Purchase Consideration for TGS, as detailed in the Acquisition Agreement, was payable by way of: - an upfront payment, being the Closing Consideration of R55 090 909; and - deferred payments, being the First Earn-out Consideration of R22 954 545 (assuming Actual PBT for the First Earn-out Period equalled or exceeded R19 360 000) and the Second Earn-out Consideration of R22 954 545 (assuming Actual PBT for the Second Earn-out Period would equal or exceed R21 296 000), subject to adjustment in the event that the Actual PBT is higher or lower and subject to a maximum aggregate amount of R64 909 091. The deferred payments were to be settled partly through the issue of Torre shares and partly in cash, with a maximum cash amount of R5 million in respect of each Earn-out Consideration (R10 million in total). 3. AMENDED TERMS In terms of the Amendment, the Earn-out Consideration is proposed to be settled as follows: - an early settlement of 50% of the total Earn-out Consideration by way of the allotment and issue of 6,500,000 Torre shares to the Seller, at the 30-day VWAP; and - the balance (i.e. 50%) of the Earn-out Consideration to be calculated and settled in accordance with the Acquisition Agreement (i.e. on the same basis as the deferred payment terms detailed in paragraph 2 above). 4. RATIONALE FOR THE AMENDMENT The rationale for the Amendment is: - One of the ultimate beneficiaries of the Seller, and an employee of the Torre group, will reduce his involvement in the TGS business going forward. This provides an opportunity for Torre to seek a mutually beneficial early settlement agreement with this individual; and - The amendment provides Torre with the opportunity to deleverage and simplify its balance sheet by eliminating a significant portion of its deferred purchase consideration liabilities. 5. EFFECT ON TORRE AND ITS SHAREHOLDERS The Company will realise an income statement gain of R4 411 203 as a result of the Amendment. In addition the Company will remove a potential maximum R5 million cash outflow over the next 12 months. The unaudited pro forma financial effects of the Amendment on Torre shareholders are the responsibility of the Torre directors and have been prepared for illustrative purposes only to provide information about how the Amendment affects the financial position and results of Torre and, because of its nature, may not give a fair reflection of Torre’s financial position, changes in equity, and results of operations or cash flows after the Amendment. The pro forma financial information has been prepared using the most recently published results of the Group for the interim period ended 31 December 2013 in terms of the Listings Requirements and guidelines issued by the South African Institute of Chartered Accountants. The accounting policies of Torre have been used in calculating the pro forma financial effects. The accounting policies used are consistent with previous accounting policies used by Torre and the accounting policies have been applied on the same basis. Before the Amendment After the % Amendment Adjustments Amendment change Profit for the period (R’000) 12 735 4 411 17 146 34.6% Headline earnings for the period (R’000) 11 909 4 411 16 320 37.0% Net asset value per share (cents) 103.61 -1.25 102.36 -1.2% Net tangible asset value per share (cents) 66.08 0.06 66.14 0.1% Basic earnings per share (cents) 7.06 2.12 9.18 30.0% Headline earnings per share (cents) 6.60 2.14 8.74 32.4% Weighted average number of shares in issue during the period (000) 180 316 6 500 186 816 3.6% Actual shares in issue at the end of the period (000) 180 316 6 500 186 816 3.6% Notes and assumptions: 1. The amounts set out in the “Before the Amendment” column above have been extracted from the Torre unaudited interim financial results for the six months ended 31 December 2013. 2. The Amendment relates to the revision of the Earn-out Consideration as detailed in paragraph 3 above. 3. It has been assumed that the Amendment was implemented on 31 December 2013 for purposes of compiling the statement of financial position and on 1 July 2012 for purposes of compiling the statement of comprehensive income. 4. Tax consequences and transaction fees in relation to the Amendment have been taken into account. 5. All adjustments, other than transaction fees, will have a continuing effect. 6. APPROVAL Approval from Torre shareholders will be required in order to implement the Amendment. Details of the Amendment will be incorporated in Torre’s annual report for the year ended 30 June 2014 and the relevant resolutions will be presented at Torre’s next annual general meeting. Salient dates will be published in due course. Johannesburg 11 September 2014 Corporate Finance Adviser and Designated Adviser to Torre AfrAsia Corporate Finance (Pty) Ltd Date: 11/09/2014 04:51:00 Produced by the JSE SENS Department. 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