Acquisition of an interest in Supabets by Phumelela and withdrawal of the cautionary announcement Phumelela Gaming & Leisure Limited (Registration number 1997/016610/06) (Incorporated in the Republic of South Africa) Share Code: PHM ISIN: ZAE000039269 (“Phumelela” or the “Company”) ANNOUNCEMENT REGARDING THE ACQUISITION OF AN INTEREST IN SUPABETS SA HOLDINGS PROPRIETARY LIMITED BY PHUMELELA AND WITHDRAWAL OF THE CAUTIONARY ANNOUNCEMENT 1. INTRODUCTION Shareholders are advised that Phumelela has agreed with Supabets SA Holdings Proprietary Limited (“Supabets”) and its controlling shareholder, the Anastassopoulos Family Investments Holding Company Proprietary Limited (“AF”), to acquire 50% of the shares in Supabets subject to the fulfilment of the conditions precedent as set out in paragraph 7 below (the “Proposed Transaction”). Supabets and AF are currently being restructured which may delay implementation. 2. NATURE OF THE BUSINESS Supabets is one of the leading and fastest growing sports betting and gaming groups in Africa with a specific focus in the high growth fixed odds sports betting market. Founded in 2008, Supabets has grown aggressively in a relatively short period of time and has captured a meaningful share of the South African sports betting market through their unique product offering, high customer service standards, strategically located retail network and strong brand recognition. Supabets, headquartered in Johannesburg with a staff complement of more than 1 400 people, currently offers sports betting, virtual sports betting, limited pay out machines, via telephone and online betting and through its strategically located branch network across South Africa. 3. RATIONALE The Anastassopoulos family has revolutionised sports betting in South Africa. The Proposed Transaction represents a unique opportunity for Phumelela to invest in an industry leading business with an innovative management team that furthers various strategic objectives and will add value to Phumelela as a whole. Supabets is a market leader in betting on sports other than horse racing and Phumelela is the market leader in betting on horse racing. The opportunity to share knowledge, technology, and product and industry best practice is attractive to both Phumelela and the Anastassopoulos family. Phumelela will leverage off Supabets’ successful business model and management team to enhance and add critical scale and mass to its existing Betting World operations. Betting World has an extensive retail footprint of 63 branches across South Africa. The opportunity exists to cross-sell its totalisator products into Supabets’ branch network. The Proposed Transaction secures the talent of the highly successful Supabets founders and management team, positioning Phumelela for further attractive growth. 4. FINANCIAL INFORMATION ON SUPABETS AND ITS EFFECT ON PHUMELELA The net cash of Supabets is estimated to be R11.5 million, as at 1 March 2015. 5. PURCHASE CONSIDERATION The purchase consideration to be paid by Phumelela for 50% of the shares in Supabets comprises a ratio of 9.25 multiplied by the normalised net profit after tax to be achieved by Supabets for the 12 month period ending 29 February 2016 (“FY2016”). Based on the forecast financial information indicated by Supabets’ management for FY2016 the purchase consideration is estimated at R470 million (“Purchase Consideration”). The Purchase Consideration is subject to a 20% price adjustment based on the normalised net profit after tax actually achieved by Supabets for FY2016. 6. SETTLEMENT OF THE PURCHASE CONSIDERATION A minimum of 35% of the Purchase Consideration is to be settled through the issue of Phumelela ordinary shares to AF in terms of an acquisition issue (“Acquisition Issue”) and the remainder will be settled in cash. The Acquisition Issue is priced at R17.39 per Phumelela share, a 0.3% discount to the 30 day volume weighted average price up to and including Thursday, 23 July 2015, being the day immediately preceding the Phumelela board meeting at which the Proposed Transaction was approved in principle. 7. CONDITIONS PRECEDENT The Proposed Transaction is subject to, inter alia, the fulfilment of the following conditions precedent: - Formation of Supabets housing AF’s South African gaming operations; - Completion of a due diligence of Supabets; - Conclusion of detailed agreements between Phumelela, AF and Supabets; and - Approval by the appropriate regulatory authorities. The effective date for the Proposed Transaction will occur upon fulfilment of all conditions precedent. 8. CATEGORISATION OF THE ACQUISITION AND SHAREHOLDER APPROVAL In terms of section 9.11 to 9.13 of the Listings Requirements the Proposed Transaction is classified as a Category 1 transaction and will require Phumelela shareholder approval. Accordingly a circular to Phumelela shareholders will be posted in due course in line with the Listings Requirements. 9. WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT Following the release of this announcement caution is no longer required to be exercised by Phumelela shareholders when dealing in Phumelela shares. Johannesburg 09 December 2015 Investment Bank and Sponsor Investec Bank Limited Legal advisor Roodt Inc. Date: 09/12/2015 04:35:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). 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