Announcement regarding the renewal of a lease agreement with a related party HUDACO INDUSTRIES LIMITED (Incorporated in the Republic of South Africa) (Registration number 1985/004617/06) Share code: HDC & ISIN: ZAE000003273 (“Hudaco” or the “Company”) ANNOUNCEMENT REGARDING THE RENEWAL OF A LEASE AGREEMENT WITH A RELATED PARTY 1. INTRODUCTION Shareholders are advised that Hudaco Trading (Pty) Limited, an 85% held subsidiary of Hudaco, via its Ambro Steel division (“Ambro Steel”), has renewed its lease agreement (“Lease Agreement”) with Dufomo Investments Proprietary Limited (“Dufomo”) in terms of which Ambro Steel will continue to lease premises located at the corner of Lamp and Snapper Roads, Wadeville, Germiston (the “Premises”) from Dufomo as set out in section 3 below (the "Lease Renewal”). Mr GR Dunford, the chief executive officer of Hudaco, is an 82% shareholder of Dufomo, which owns the Premises. 2. RATIONALE FOR THE LEASE RENEWAL The rationale for the Lease Renewal is to provide continuity to Ambro Steel’s business, which has been renting the Premises for over 26 years. The buildings and structures on the Premises were purposely built to suit the requirements of Ambro Steel, which already occupied the Premises before being acquired by Hudaco during 2008. The Premises provide Ambro Steel with the cranage and heavy-duty power that it needs to operate. Alternative properties with the appropriate installations are difficult to source. The Premises are located in the well-established industrial node of Wadeville, which is accessible to Ambro Steel’s customers and staff. 3. DETAILS AND TERMS OF THE LEASE RENEWAL In terms of the Lease Agreement, Ambro Steel will lease the Premises comprising office, factory and warehouse space, measuring 5 374m2 in aggregate, with effect from 1 March 2020 (“Commencement Date”) for a period of 3 years from the Commencement Date (“Initial Period”). The monthly rentals payable in respect of the Premises for the Initial Period, which includes an annual escalation of 8%, is set out in the table below: Period Monthly rental (excluding VAT) 1 March 2020 to 28 February 2021 R287 710.92 1 March 2021 to 28 February 2022 R310 727.79 1 March 2022 to 28 February 2023 R335 586.02 R934 024.73 There are no outstanding conditions precedent relating to the Lease Renewal. 4. FINANCIAL INFORMATION Hudaco incurs lease expenses of the amount set out in paragraph 3 above. The rental payable is deductible for tax purposes. The Lease Renewal has no effect on net assets. 5. CATEGORISATION AND SMALL RELATED PARTY TRANSACTION The entering into of the Lease Renewal is a “small related party transaction” in terms of section 10.7 of the JSE Listings Requirements as Hudaco will be transacting with a “related party”, being Dufomo and accordingly no shareholder approval is required provided that an independent expert has confirmed that the terms of the Lease Renewal are fair insofar as Hudaco shareholders are concerned. The board of directors of Hudaco appointed Merchantec Capital (the “Independent Expert”) to provide an independent fairness opinion on the Lease Renewal (the “Fairness Opinion”) in compliance with paragraph 10.7(b) of the JSE Listings Requirements. The Independent Expert has considered the terms and conditions of the Lease Renewal and is of the opinion that the Lease Renewal is fair insofar as Hudaco shareholders are concerned. The Fairness Opinion is available for inspection at the registered office of the Company, Building 9, Greenstone Hill Office Park, Emerald Boulevard, Greenstone Hill, Edenvale, for a period of 28 days from the date of this announcement and may be obtained on request from Hudaco’s Group Company Secretary at reanaw@hudaco.co.za. Johannesburg 22 May 2020 Corporate advisor and Sponsor Nedbank Corporate and Investment Banking Independent Expert Merchantec Capital Date: 22-05-2020 04:05:00 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.