Further announcement regarding the acquisition of an interest in Supabets sa Holdings Proprietary Limited 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”) FURTHER ANNOUNCEMENT REGARDING THE ACQUISITION OF AN INTEREST IN SUPABETS SA HOLDINGS PROPRIETARY LIMITED 1. INTRODUCTION Shareholders are referred to the announcement released by Phumelela on 9 December 2015 on the stock exchange news service (“SENS”) of the JSE Limited (“JSE”) wherein Phumelela advised that it has agreed with Supabets SA Holdings Proprietary Limited (“Supabets”) and its controlling shareholder, the Anastassopoulos Family (“AF”), to acquire 50% of the shares in Supabets subject to the fulfilment or waiver, as the case may be, of certain conditions precedent (the “Transaction”). Phumelela has now concluded formal agreements with the AF, and the updated salient details of the Transaction are contained within paragraphs 4 to 8 of this announcement. 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 spectacularly 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 2000 people, currently offers fixed odds sports and numbers betting and limited pay out machines betting at its retail network across South Africa. Supabets also offers online and telephone betting. 3. RATIONALE The AF has revolutionised sports betting in South Africa. The Transaction represents a unique opportunity for Phumelela to invest in an industry leading business with an innovative and entrepreneurial 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 AF. 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 66 branches across South Africa. The opportunity exists to offer Phumelela’s totalisator and fixed odds horse racing products in Supabets’ retail network and also to offer Supabets’ sports betting products in Betting World’s retail network. The Transaction secures the talent of the highly successful Supabets founders and management team, positioning Phumelela for further attractive growth. 4. PURCHASE CONSIDERATION AND EFFECT ON PHUMELELA Supabets is expected to have generated net profit after tax for the financial year ended 29 February 2016 of R102 million (“NPAT”). The purchase consideration to be paid by Phumelela for 50% of the shares in Supabets is calculated on the basis that the value for 100% of Supabets is 9.25 multiplied by the audited sustainable NPAT achieved by Supabets for the financial year ended 29 February 2016 (“Audited NPAT”). Based on the NPAT the purchase consideration is estimated to be R471.75 million (“Purchase Consideration”). The Purchase Consideration is subject to a pro rata price adjustment (subject to a maximum adjustment of 20% upwards or downwards) if the Audited NPAT achieved differs from R102 million. The Purchase Consideration is subject to the following adjustments in addition to the pro rate price adjustment contemplated above: - Interest earned on the cash portion of the Purchase Consideration from 1 March 2016 until the Rights Offer issue date (“Rights Offer Issue Date”); and - Dividends declared by Phumelela from 1 March 2016 to the Rights Offer Issue Date relating to the Acquisition Issue shares. The Transaction is expected to have a favourable impact on Phumelela’s earnings per share. 5. SETTLEMENT OF THE PURCHASE CONSIDERATION The Purchase Consideration will be paid to the AF as follows: - 35% through the issue of new Phumelela ordinary shares in terms of an acquisition issue in accordance with the JSE Listings Requirements (“Acquisition Issue”); and - 65% in cash, which will be financed by Phumelela as follows: o firstly through the issue of new Phumelela ordinary shares by way of a rights offer to Phumelela shareholders in terms of the JSE Listings Requirements (“Rights Offer”) for a total amount of R306 million (“Rights Offer Quantum”); and o any remaining balance will be settled through debt funding. The Acquisition Issue and Rights Offer will be priced at R17.39 per share, constituting 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 Transaction was approved in principle. 6. EFFECTIVE DATE AND PERMITTED DISTRIBUTIONS The effective date for the Transaction is 1 March 2016. The AF have agreed to retain all profits earned with effect from 1 March 2015 in Supabets. A portion of the interest earned on excess cash retained in Supabets from 1 March 2015 to 29 February 2016 will be payable by Supabets to the AF. 7. RIGHTS OFFER IRREVOCABLE COMMITMENTS AND EXCESS APPLICATIONS Phumelela has concluded agreements with certain Shareholders (“Committed Shareholders”) in terms of which the Committed Shareholders have irrevocably committed to follow their rights and to make application for excess shares in the Rights Offer. The commitments substantially exceed the Rights Offer Quantum. Shareholders will have the right to apply for excess Rights Offer shares. Excess Rights Offer shares will be attributed equitably, taking cognisance of the number of shares and rights held by shareholders just prior to such allocation, including those taken up as a result of the Rights Offer, and the number of excess Rights Offer shares applied for by such shareholders. 8. CONDITIONS PRECEDENT The Transaction is subject to the fulfilment or waiver (in whole or in part and to the extent permissible by law) of, inter alia, the following conditions by 31 October 2016: - restructuring of the AF’s gaming interests resulting in all South African operations being housed within Supabets; - completion of a due diligence of Supabets by Phumelela; - the requisite majority of Phumelela shareholders providing the necessary approvals required to implement the Transaction and issue new Phumelela ordinary shares for the Acquisition Issue and the Rights Offer in terms of Phumelela’s Memorandum of Incorporation, the Companies Act, 2008 (Act No. 71 of 2008) and the JSE Listings Requirements, to the extent required; - conclusion of fixed term employment agreements with key Supabets management; - approval by the appropriate regulatory authorities; and - the requisite approval having been received from the JSE for the Transaction and the listing of the new Phumelela ordinary shares to be issued in terms of the Rights Offer and Acquisition Issue. 9. CATEGORISATION OF THE TRANSACTION AND SHAREHOLDER APPROVAL In terms of the JSE Listings Requirements the Transaction is classified as a Category 1 transaction and will require Phumelela shareholder approval. Shareholders are referred to the SENS announcement released by Phumelela on 12 February 2016, regarding the delay of the posting of the circular to Phumelela shareholders with its anticipated timing of posting not being later than 31 July 2016. Phumelela will make every effort to expedite this process. Johannesburg 29 April 2016 Financial Advisor and Sponsor Investec Bank Limited Legal advisor Roodt Inc. Date: 29/04/2016 05:05:00 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.