PINNACLE HOLDINGS LIMITED - Pinnacle to acquire 51 % of Solareff

Pinnacle to acquire 51 % of Solareff

Pinnacle Holdings Limited
Registration number 1986/000334/06
Share Code: PNC
ISIN: ZAE000184149
(“Pinnacle” or “the Group”)

PINNACLE TO ACQUIRE 51 % OF SOLAREFF

INTRODUCTION

The board of directors of Pinnacle (“the Board”) is pleased to advise shareholders that Pinnacle has
entered into an agreement (“the Agreement”) with the shareholders of Solareff (Proprietary) Limited
(“Solareff”), being Messrs Jacob Hendrik DeVilliers Botha and Dirk Jacobus Botha, to acquire 51 % of the
issued share capital of Solareff for a cash consideration, subject to the condition precedent set out below
(“the Acquisition”).

NATURE OF SOLAREFF BUSINESS

Solareff is a fast growing solar photovoltaic specialist with more than a decade’s experience in
renewable energy projects. The company has completed and is busy with a number of turnkey projects
in Southern Africa ranging from 20KWp to as large as 5 MWp solar power installations. As one of the top
three solar photovoltaic specialist companies in Southern Africa, it is recognised as a market leader in its
field. It does both rooftop and ground solar installations for mainly corporate customers. The company
partners with Tier 1 technology partners and is managed and supported by a highly qualified team of
engineers.

RATIONALE

The board of Pinnacle has decided that it is strategic for the group to enter the renewable energy space.
With Pinnacle’s vast footprint in Southern Africa, as well as a reputation for quality solutions, it is ideally
placed to assist Solareff in expanding its business further across the region. Pinnacle will also integrate
the solar photovoltaic product into its existing product range and aim to become the market-leading
distributor of the products.
PURCHASE CONSIDERATION

The purchase consideration for 51 % will be based on 51 % of the Net Profit after tax (“NPAT”) of Solareff,
for the years ending 29 February 2016 and 28 February 2017, multiplied by a price earnings ratio of 6.5
less the amount of all existing loans due by certain related parties of the existing shareholders to Solareff
on the effective date. These loans will be settled by Pinnacle for and on behalf of such related parties in
reduction of the purchase consideration as aforesaid. The remaining 49% of the issued share capital is
subject to normal pre-emptive provisions. The purchase consideration is capped at a maximum of R200
million, which would only be achieved if the NPAT of Solareff referred to below, for 2017 was of the order
of R60million.


The purchase consideration will be paid as follows:
    .   On the effective date, an Initial Payment of 80 % of the purchase price based on an estimate of
        the NPAT for the year ending 29 February 2016;

    .   An Interim Payment, the balance of 20 %, payable 5 business days after the 29 February 2016
        audited annual financial statements have been finalised; and

    .   A Final Payment - The final payment of the purchase price will be based on the NPAT for the year
        ending 28 February 2017 less the Initial and Interim payments. The final payment date is 5
        business days after the 28 February 2017 audited annual financial statements have been finalised.

For the year ended 28 February 2015, as per the unaudited financial statements, the value of the net
assets of Solareff was R 1.8 million(R 7.8 million at 31 October 2015 as per the unaudited management
accounts) and the profit after tax for the twelve months ended 28 February 2015 was R 1.4 million (R6.1
million for the eight months ended 31 October 2015 as per the unaudited management accounts)

CONDITION PRECEDENT AND EFFECTIVE DATE
The acquisition is subject to the fulfilment or waiver, as the case may be, of the condition precedent that
by no later than 31 January 2016, Pinnacle delivers to Solareff a written confirmation that it is satisfied, in
its sole discretion, that from the offer date (14 October 2015) until 27 January 2016 there has been no
material adverse effect on Solareff, its operations, performance, prospects, or business; and no act of
insolvency has occurred.

The effective date is expected to be 1 February 2016.

CATEGORISATION

 In view of the maximum capped purchase price, if achieved, the Acquisition is a Category 2 transaction,
in terms of the Listings Requirements of the JSE Limited but does not require Pinnacle shareholder
approval.

WARRANTIES AND INDEMNITIES

The shareholders of Solareff have provided warranties and indemnities that are standard for this type of
transaction.

Midrand
7 December 2015

Sponsor: Deloitte & Touche Sponsor Services Proprietary Limited

Legal Advisor: Tugendhaft Wapnick Banchetti and Partners

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