ADCORP HOLDINGS LIMITED - Acquisition announcement

Acquisition announcement

Adcorp Holdings Limited
(Incorporated in the Republic of South Africa)
(Registration number 1974/001804/06)
Share code: ADR & ISIN: ZAE000000139
(“Adcorp” or “the Company” or “the Adcorp Group”)

ACQUISITION ANNOUNCEMENT

INTRODUCTION

The Board of Directors of Adcorp is pleased to announce that the Company’s wholly owned
subsidiary in Australia, Adcorp Holdings Australia Proprietary Limited (“AHA” or the “Purchaser”),
has entered into an agreement with Christopher Robert Hicks and C&B Hicks Nominees
Proprietary Limited (the “Sellers”) in terms of which AHA, will acquire 100% of the issued share
capital in Dare Holdings Proprietary Limited (“Dare”), an Australian registered entity, subject to
the conditions precedent as set out below (the “Acquisition”). The effective date of the
Acquisition will be the day after the conditions precedent have been fulfilled.

Dare is a provider of qualified and experienced engineering and technical contractors on a
contract and permanent basis to Australian and international clients in the resources (oil & gas)
sector. The company was established in 1988 by Christopher Robert Hicks and has long standing
relationships with market leading multinational corporations.

RATIONALE FOR THE ACQUISITION

Adcorp believes that the Acquisition will produce various opportunities and benefits for the
Adcorp Group, including but not limited to:

   .   Enhanced potential to expand Dare into Asia and Africa on the back of existing customer
       relationships;
   .   Opportunity to leverage Dare customer base for Adcorp’s current Australian businesses
       in the independent IT contracting and blue collar segments viz: Paxus and Labour
       Solutions Australia; and
   .   Based on historical performance, the Acquisition is earnings enhancing to Adcorp given
       100% debt funding being utilised.

Any forward looking statements contained in this announcement have not been reviewed nor
reported on by Adcorp’s auditors.

PAYMENT TO SELLERS

The total payment to the Sellers comprise the following:

 1. Purchase consideration:
    The purchase consideration to be paid by the Purchaser shall be split into 3 separate
    payments as follows:

    a) Initial payment of AUD20.4 million when the conditions precedent have been fulfilled;
    b) Normalised earnings before interest and tax (“Normalised EBIT”) multiple of 0.6 times
       for year ending 30 June 2015; and
    c) Normalised EBIT multiple of 0.6 times for year ending 30 June 2016.

 2. Declaration of dividend payable by Dare based on estimates of the financial position three
    days prior to completion of the transaction.

 3. Refund of working capital value calculated when the conditions precedent have been
    fulfilled. If the working capital value calculated is negative, the Seller will pay the Purchaser
    that value.

The total purchase consideration is estimated at AUD30 million and the aggregate payment
including dividends and refund of working capital value to the Sellers is capped at AUD55 million.
The final payment is to be made not later than 31 October 2016.

The initial payment of AUD20.4 million as well as the payment of dividend and refund of working
capital value shall be settled in cash by way of increased debt facilities granted to AHA by its
bankers in Australia. The subsequent payments, to the extent applicable, shall be payable from
cash generated from future operations.

For the financial year ended 30 June 2014, the value of the net assets of Dare was AUD12.5 million
and the profit after tax for the year then ended was AUD 5.1 million.

CONDITIONS PRECEDENT TO THE ACQUISITION

The implementation of the sale and purchase agreement will be subject to the fulfilment, or
waiver (in whole or in part), of the following outstanding conditions by no later than 22 April
2015, or such later date as AHA and the Sellers may agree to in writing:

   .   Dare obtains the necessary consent from key customers and the lessor;

   .   the consent of the lessor/financier in respect of equipment and vehicle lease or hire
       purchase agreements held by Dare;

   .   The Purchaser entering into a binding agreement with AHA’s bankers to provide the
       necessary funds for the Acquisition;
   .   The key executives and certain other employees entering into employment agreements;
       and

   .   The Seller to ensure compliance with the relevant legislation relating to dividends to be
       paid.



CATEGORISATION

The Acquisition is a Category 2 transaction in terms of the Listings Requirements of the JSE
Limited and does not require Adcorp shareholder approval.

WARRANTIES

Both parties have provided the other with the standard warranties that are usual for this type of
transaction.

Further information may be obtained by sending queries to the email address: cfo@adcorp.co.za

Bryanston
20 April 2015

Sponsor: Deloitte & Touche Sponsor Services Proprietary Limited

Legal Advisor: K&L Gates Australia

Date: 20/04/2015 10:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). 
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
 the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct, 
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
 information disseminated through SENS.