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HOWDEN AFRICA HOLDINGS LIMITED - Firm Intention to make an Offer to minority shareholders, via a Scheme of Arrangement or Conditional General Offer

Release Date: 24/10/2018 16:13
Code(s): HWN     PDF:  
 
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Firm Intention to make an Offer to minority shareholders, via a Scheme of Arrangement or Conditional General Offer

Howden Africa Holdings Limited                     Howden Group South Africa Limited
(Incorporated in the Republic of South Africa)     (Incorporated in the Republic of South Africa)
(Registration number 1996/002982/06)               (Registration number 1952/000321/06)
JSE code: HWN ISIN: ZAE000010583                   (“HGSAL”)
(“HAHL” or “the Company”)


JOINT ANNOUNCEMENT OF A FIRM INTENTION TO MAKE AN OFFER TO ACQUIRE ALL
OR A PORTION OF THE ISSUED ORDINARY SHARES IN HAHL, OTHER THAN THE
SHARES HELD BY HGSAL AND JAMES HOWDEN & GODFREY OVERSEAS LIMITED
(“JH&G”) VIA A SCHEME OF ARRANGEMENT OR CONDITIONAL GENERAL OFFER;
PROPOSED DELISTING AND WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT

1.   INTRODUCTION

HAHL shareholders (“Shareholders”) are referred to the cautionary announcement published on
the Stock Exchange News Service operated by the JSE Limited (“SENS”) on Wednesday,
26 September 2018 (“Cautionary Announcement”) wherein they were advised that the board of
directors of HAHL (“the Board”) had resolved, in principle, to proceed towards seeking a delisting
("Delisting") of HAHL from the Main Board of the securities exchange operated by the JSE
Limited (“JSE”).

 Following the Cautionary Announcement:
     *   the Board has resolved that it will propose a scheme of arrangement as contemplated in
         section 114(1)(e) of the Companies Act, 71 of 2008, as amended from time to time
         (“Companies Act”) and paragraph 1.17(b) of the JSE Listings Requirements (“Listings
         Requirements”), between HAHL and its Shareholders (“Scheme”) in terms of which, if
         implemented, HAHL will repurchase all of its issued ordinary shares (“HAHL Shares”),
         excluding shares held by HGSAL and JH&G, (each, a "Scheme Share"), for a cash
         consideration of R44.00 (forty four Rand) per Scheme Share (“Scheme Consideration”);
         and
     *   HGSAL has resolved to make a conditional general offer (“the General Offer”), as
         contemplated in section 117(1)(c)(v) of Companies Act and paragraph 1.15(c) of the
         Listings Requirements to Shareholders to acquire all of the HAHL Shares, not already
         held by HGSAL or by JH&G, (each, a “General Offer Share”) for a cash consideration of
         R44.00 (forty four Rand) per General Offer Share (“the General Offer Consideration”).

 The Scheme and General Offer will be proposed concurrently on the basis that the
 implementation of the General Offer will be conditional upon, inter alia, the Scheme not becoming
 operative.

 In this regard, HGSAL, has submitted a firm intention offer letter to HAHL dated Tuesday,
 23 October 2018 in relation to the General Offer.

 The holding companies of HAHL are HGSAL and JH&G, who form part of the Colfax Corporation
 Inc. (“Colfax”) group of companies. Colfax is a public company incorporated in the United States
 of America and listed on the New York Stock Exchange.

 The Delisting will occur if the Scheme becomes operative or the General Offer becomes wholly
 unconditional and is implemented.

 The Scheme will be subject to the fulfilment or waiver of the conditions set out in paragraph 3.2
 below (“Scheme Conditions”) and the General Offer will be subject to the fulfilment or waiver of
 the conditions set out in paragraph 3.4 below (“General Offer Conditions”).

 The purpose of this joint firm intention announcement (“Firm Intention Announcement”) is to
 advise Shareholders of the terms and conditions of the Scheme and General Offer.

2.   RATIONALE FOR THE SCHEME AND GENERAL OFFER

HAHL continues to explore options for the introduction of an appropriate long-term sustainable
Broad-Based Black Economic Empowerment (“B-BBEE”) partner to the HAHL group of
companies.

The Board concluded that the Scheme and General Offer:
   *   afford HAHL minority shareholders a unique opportunity to exit from holding HAHL
       Shares, which are tightly held with relatively poor liquidity and analyst coverage;
   *   allow HAHL to conclude a B-BBEE transaction in an unlisted environment which provides
       greater flexibility; and
   *   remove the duplication of regulatory processes, listing fees and associated costs as a
       result of both HAHL and its ultimate parent company, Colfax, being listed.

In addition,
    *    HAHL has not and is not expecting to utilise its listed platform to raise equity capital nor
         make use of a listed share incentive scheme to incentivise staff members;
    *    the Board recognises the cost of implementing a B-BBEE transaction which will not be
         borne by the minority shareholders should the Scheme become operative or all minority
         shareholders accept the General Offer;
    *    HAHL requires a long term shareholder base that is able to sustain challenging market
         conditions, which may be difficult for the current profile of minority shareholders; and
    *    management will be able to dedicate more time and resources on the performance of the
         business without dedicating time and resources to regulatory requirements and
         processes associated with being a listed entity.

3.   SALIENT TERMS OF THE SCHEME AND GENERAL OFFER

The Scheme and the General Offer each constitute an “affected transaction” as defined in sections
117(1)(c)(iii) and 117(1)(c)(v) of the Companies Act respectively, and as such the Scheme and
General Offer are regulated by the Companies Act and the Companies Regulations, 2011 (the
“Companies Regulations”).

The salient terms of and other information pertaining to the Scheme and General Offer are set out
below:

3.1. The Scheme

The Scheme will be proposed by the Board, between HAHL and the Shareholders, other than HGSAL
and JH&G, (the “Eligible Shareholders”).

In the event that the Scheme becomes operative, the listing of all of the Shares on the JSE will
be terminated, and Eligible Shareholders, excluding those Eligible Shareholders who validly
exercise their appraisal rights in accordance with section 164 of the Companies Act as a
consequence of the approval of the Scheme and whose shareholder rights have not been
reinstated as envisaged in sections 164(9) and 164(10) of the Companies Act or who have not
been ordered by any South African High court (“the Court”) to withdraw their demands in terms
of section 164(15)(c)(v)(aa) of the Companies Act (“Scheme Participants”), will be deemed to
have disposed of all of their Scheme Shares at the Scheme Consideration, such that HAHL will
acquire all of the Scheme Shares previously held by the Scheme Participants.

3.2. The Scheme Conditions

Implementation of the Scheme will be subject to the fulfilment or waiver of the following Scheme
Conditions no later than 17h00 (South African time) on Monday, 31 December 2018:

3.2.1.   the approval of the Scheme and HAHL Share repurchase, and implementation thereof,
         by way of special resolution adopted by the requisite majority of Eligible Shareholders at
         the general meeting of Eligible Shareholders ("General Meeting") to be held on or about
         Wednesday, 12 December 2018 in order to consider and, if deemed fit, pass, the special
         resolution in accordance with sections 48(8) and 115(2) of the Companies Act (“Scheme
         Resolution”);

3.2.2.   HAHL has not elected to treat the Scheme Resolution as a nullity pursuant to section
         115(5)(b) of the Companies Act;

3.2.3.   in the circumstances where HAHL has not elected to treat the Scheme Resolution as a
         nullity pursuant to section 115(5)(b) of the Companies Act, a Court has granted its
         approval pursuant to section 115(3) of the Companies Act in circumstances where:
3.2.3.1.         the Scheme Resolution is opposed by 15% or more of the voting rights that were
                 exercised in respect of the Scheme Resolution; and
3.2.3.2.         an HAHL Shareholder who voted against the Scheme Resolution requires HAHL,
                 within five business days after the vote, to seek Court approval pursuant to section
                 115(3)(a) of the Companies Act;

3.2.4.   no HAHL Shareholder who voted against the Scheme Resolution applies to the Court
         within ten Business Days after the passing of the Scheme Resolution for leave to apply
         to the Court for a review of the Scheme, as contemplated in sections 115(3)(b) and 115(6)
         of the Companies Act;

3.2.5.   HAHL waives the scheme condition in 3.2.4 and the Court does not grant leave to any
         HAHL Shareholder to apply to Court for a review of the Scheme, as contemplated in
         sections 115(3)(b), 115(6) and 115(7) of the Companies Act;

3.2.6.   HAHL waives the scheme condition in 3.2.5 and the Court approves the Scheme
         Resolution pursuant to section 115(7) of the Companies Act;

3.2.7.   no Eligible Shareholder (i) gives notice objecting to the Scheme; (ii) votes against the
         Scheme Resolution; and (iii) exercises its appraisal rights in terms of section 164 of the
         Companies Act by giving valid demands in terms of sections 164(5) to 164(8) of the
         Companies Act; and

3.2.8.   all approvals, consents or waivers from those South African regulatory authorities as may
         be necessary for HAHL to implement the Scheme, including the JSE and the Takeover
         Regulation Panel (“TRP”) (by means of issue of a compliance certificate in terms of
         section 121(b)(i) of the Companies Act), are obtained on an unconditional basis or, to the
         extent that any such regulatory approvals, consents or waivers are obtained subject to
         any condition or qualification, HAHL (to the extent that it is adversely affected by the
         condition or qualification) confirms in writing that the condition or qualification is
         acceptable to it, which confirmation shall not be unreasonably withheld or delayed.

HAHL shall be entitled to waive (in whole or in part) in writing any one or more of the Scheme
Conditions stipulated in paragraphs 3.2.4, 3.2.5 and 3.2.7. The remaining Scheme Conditions
stipulated above are not capable of waiver. The time and/or date for fulfilment or waiver of the
Scheme Conditions may be extended by the Company as may be agreed in writing between the
Company and the TRP.

3.3. The General Offer

Simultaneously with the Scheme, HGSAL will make a separate but concurrent General Offer, in
terms of section 117(1)(c)(v) of the Companies Act and paragraph 1.15(c) of the Listings
Requirements, to the Eligible Shareholders, whereby each Eligible Shareholder will be entitled to
elect whether or not to dispose of all of their General Offer Shares to HGSAL for the General Offer
Consideration.

If the General Offer becomes wholly unconditional and is implemented, then the listing of all the
HAHL Shares on the JSE will be terminated and each Eligible Shareholder that has accepted the
General Offer (“General Offer Participants”) will receive the General Offer Consideration and
dispose of their General Offer Shares. Eligible Shareholders who have not accepted the General
Offer, subject to the provisions of section 124(1) of the Companies Act as set out below, will
remain shareholders in HAHL, which will become an unlisted subsidiary of HGSAL, and the
tradability of their HAHL Shares will be limited.

In the event that the General Offer is implemented and accepted by Eligible Shareholders holding
at least 90% of the General Offer Shares, HGSAL may, at its election, invoke the provisions of
section 124(1) of the Companies Act, to compulsorily acquire all of the General Offer Shares not
already tendered by the Eligible Shareholders.

3.4. The General Offer Conditions

Implementation of the General Offer will be subject to the fulfilment or waiver of the following
conditions by no later than 17h00 (South African time) on Wednesday, 2 January 2019, or such
later date as HAHL, and HGSAL agree on in writing on or before such date:

3.4.1.   the Scheme does not become operative;

3.4.2.   by not later than 17:00 (South Africa time) on Wednesday, 12 December 2018, approval
         by Eligible Shareholders of an ordinary resolution to approve the Delisting in terms of
         paragraphs 1.15(a) and 1.16 of the Listings Requirements (“Delisting Resolution”);

3.4.3.   Eligible Shareholders accept the General Offer in respect of so many General Offer
         Shares as will result in HGSAL acquiring more than 50% of the General Offer
         Shares; and

3.4.4.   the receipt of all approvals, consents or waivers from those South African regulatory
         authorities as may be necessary for HAHL to implement the General Offer and Delisting,
         including the JSE and TRP (by means of issue of a compliance certificate in terms of
         section 121(b)(i) of the Companies Act) on an unconditional basis. Provided that if any
         such approval, consent or waiver is granted subject to any condition or qualification, then
         HGSAL and HAHL must agree to the imposition of such condition or qualification in
         writing, in which event the approval, consent or waiver will be regarded as having been
         granted.

HGSAL shall be entitled to waive (in whole or in part) in writing the General Offer Conditions
stipulated in paragraphs 3.4.2 and 3.4.3. The General Offer Conditions stipulated in paragraphs
3.4.1 and 3.4.4 are not capable of waiver.

3.5. Scheme Consideration and General Offer Consideration

The Scheme Consideration and General Offer Consideration represents:

3.5.1.   a 22.63% premium to R35.88 per HAHL Share, being the 30-day volume weighted
         average price (“VWAP”) of an HAHL share traded on the JSE up to and including Tuesday,
         25 September 2018, being the last trading day prior to the release of the Cautionary
         Announcement;

3.5.2.   a 25.75% premium to R34.99 per HAHL Share, being HAHL’s closing price on the JSE
         on Tuesday, 25 September 2018, being the last trading day prior to the release of the
         Cautionary Announcement;

3.5.3.   a 25.75% premium to R34.99 per HAHL Share, being the 30-day VWAP of an HAHL
         share traded on the JSE up to and including Tuesday, 23 October 2018, being the last
         trading day prior to the release of the Firm Intention Announcement on SENS; and

3.5.4.   a 31.74% premium to R33.40 per HAHL Share, being HAHL’s closing price on the JSE
         on Tuesday, 23 October 2018, being the last trading day prior to the release of the Firm
         Intention Announcement on SENS.

As at 30 June 2018, the consolidated cash and cash equivalents balance (“Cash Balance”) in
HAHL was R1.3 billion (R20.45/ HAHL Share).

A significant component of HAHL’s market capitalisation is attributable to the Cash Balance. The
table below illustrates the split of the Scheme Consideration and General Offer Consideration and
effective premium thereon that is attributable to the Cash Balance and the underlying operations
of HAHL:

                        Prior to the               Scheme               Scheme
                        Cautionary                 Consideration        Consideration and
                        Announcement               and General          General Offer
                        (25 September 2018)        Offer                Consideration
                                                   Consideration        premium
 30-Day VWAP,           R35.88                     R44.00               22.63%
 comprising:
   * Cash Balance       R20.45                     R20.45               0.00%
   * Operations         R15.43                     R23.55               52.62%
  (Note 1)
 Market price,          R34.99                     R44.00               25.75%
 comprising:
   * Cash Balance       R20.45                     R20.45               0.00%
   * Operations         R14.54                     R23.55               61.97%
  (Note 2)
                        Prior to the Firm          Scheme               Scheme
                        Intention                  Consideration        Consideration and
                        Announcement               and General          General Offer
                        (23 October 2018)          Offer                Consideration
                                                   Consideration        premium
 30-Day VWAP,           R34.99                     R44.00               25.75%
 comprising:
   * Cash Balance       R20.45                     R20.45               0.00%
   * Operations         R14.54                     R23.55               61.97%
  (Note 3)
 Market price,          R33.40                     R44.00               31.74%
 comprising:
   * Cash Balance       R20.45                     R20.45               0.00%
   * Operations         R12.95                     R23.55               81.85%
  (Note 4)

Notes
1. The 30-day VWAP of an HAHL share traded on the JSE up to and including Tuesday,
   25 September 2018, being the last trading day prior to the release of the Cautionary
   Announcement.
2. HAHL’s closing price on the JSE on Tuesday, 25 September 2018, being the last trading day
   prior to the release of the Cautionary Announcement.
3. The 30-day VWAP of an HAHL share on the JSE up to and including Tuesday, 23 October
   2018, being the last trading day prior to the release of the Firm Intention Announcement on
   SENS.
4. HAHL’s closing price on the JSE on Tuesday, 23 October 2018, being the last trading day prior
   to the release of the Firm Intention Announcement on SENS.

The tax implications of the Scheme and General Offer are dependent upon the individual
circumstances of the Scheme Participants and General Offer Participants concerned and the tax
jurisdiction applicable to such Scheme Participants and General Offer Participants. It is
recommended that the Scheme Participants and General Offer Participants seek appropriate
professional advice in this regard.

4.   TERMINATION EVENTS
The Scheme and/or General Offer will terminate with immediate effect, if any or all of the Scheme
Conditions or General Offer Conditions have not been fulfilled or waived on or before the relevant
date/s for fulfilment or waiver.

5.   INDEPENDENT BOARD, INDEPENDENT EXPERT AND RECOMMENDATIONS
HAHL, in terms of the Companies Regulations, has constituted an independent board represented
by M Malebye, lead independent non-executive director, H Mathe, and S Badat (“Independent
Board”) to consider, inter alia, the terms and conditions of the Scheme and General Offer.
The Independent Board have appointed Mazars Corporate Finance (Pty) Limited (“the
Independent Expert”) to provide the independent expert opinion to be prepared in respect of the
Scheme and General Offer in accordance with Regulation 90(6), as read with sections 114(2) and
114(3) of the Companies Act and paragraph 1.15(d) as read with Schedule 5 of the Listings
Requirements (“Independent Expert Report”). The Independent Expert Report has concluded
that the Scheme Consideration and General Offer Consideration is fair and reasonable.
Having regard to the Independent Expert Report:
    *   The Independent Board is unanimously of the opinion that the Scheme and General Offer
        are fair and reasonable;
    *   The Board is unanimously of the opinion that the Scheme and General Offer are fair and
        reasonable; and
    *   In terms of paragraph 1.15(d) of the JSE Listings Requirements, the Board is
        unanimously of the opinion that the terms and conditions of the General Offer are fair to
        the Shareholders.
The Independent Expert Report will be included in the circular (as envisaged in paragraph 9
below).

The Independent Board and the Board unanimously recommend that the Eligible Shareholders
vote in favour of the Scheme Resolution, the Delisting Resolution and that they accept the General
Offer.

The directors of HAHL do not own any HAHL Shares.

6.   THE DELISTING

The listing of the HAHL Shares on the JSE will be terminated subject to:
    * the Scheme becoming operative; or
    * the Delisting Resolution being approved by the requisite majority of Eligible Shareholders
      at the General Meeting and the General Offer being implemented.

7.   SOLVENCY AND LIQUIDITY

The Board has concluded that the Company will satisfy the solvency and liquidity test
contemplated in section 4 of the Companies Act immediately after completing the repurchase
by HAHL of the Scheme Shares in terms of the Scheme.

8.   FINANCIAL EFFECTS

8.1. Financial effects of the Scheme:

The impact of the Scheme has been calculated and the Board can confirm that the implementation
of the Scheme will impact the financial information of HAHL as follows:
     *   a decrease in cash of R1.3 billion;
     *   a decrease in equity of R1.3 billion;
     *   once-off transaction costs of approximately R10.3 million payable out of working
         capital; and
     *   forfeit on interest received of R68 million on an after tax rate of 5.3% on cash utilised
         for the Scheme, which adjustment is of a continuing nature.

The Scheme is not a pro rata repurchase nor is there a re-investment involved, as such, pro forma
financial information with regards to the Scheme is not required.

8.2. Pro forma financial effects of the General Offer:

8.2.1.   Pro forma financial information of the General Offer based on the financial statements for
         the year ended 31 December 2017 in compliance with regulation 106(7)(c)(ii) of the
         Companies Regulations and in compliance with paragraph 8.25(a) of the Listings
         Requirements:

         8.2.1.1. The table below sets out the pro forma financial information of the General Offer
                  based on the financial statements for the year ended 31 December 2017 and
                  have been prepared for illustrative purposes only, in order to provide information
                  about how the General Offer might have affected Shareholders had the General
                  Offer been implemented on the dates indicated in the notes below.
         8.2.1.2. Due to its nature, the pro forma financial information may not fairly present the
                  financial position, or results of operations of HAHL after the General Offer. The
                  preparation of the pro forma financial information is the responsibility of the
                  directors of HAHL.
         8.2.1.3. The pro forma financial information has been prepared in accordance with the
                  Listings Requirements and the guide on pro forma financial information issued
                  by the South African Institute of Chartered Accountants. The accounting policies
                  used in compiling the pro forma financial information complies with IFRS and are
                  consistent with those applied in compiling the unaudited restated annual financial
                  statements for the year ended 31 December 2017, with the exception of the
                  adoption of IFRS 15 - Contracts with customers as per the SENS announcement
                  on 31 July 2018.
                                                                     Before
                                                                      the       After the
                                                                    General     General
                                                                     Offer       Offer
                                                        Notes         (1)          (5)      Effect %
 For the year ended 31 December 2017:
   Basic and diluted Earnings Per Share (“EPS”)
   (cents)                                                      2      417.57     401.86        (4%)
   Basic and diluted Headline Earnings Per Share
   (“HEPS”) (cents)                                             2      417.77     402.06        (4%)
 As at 31 December 2017:
   Net asset value per share (“NAVPS”) (cents)                  3    2 332.55    2 316.84       (1%)
   Tangible net asset value per share (“TNAVPS”)
   (cents)                                                      3    2 267.71    2 252.00       (1%)

 Total number of shares in issue ('000)                         4      65 729     65 729          0%

 Total weighted average number of shares in issue
 ('000)                                                         4      65 729     65 729          0%
Notes:
    1. The "Before the General Offer" column is based on the unaudited restated condensed
       consolidated statement of comprehensive income of HAHL for the year ended
       31 December 2017 and the unaudited restated condensed statement of consolidated
       financial position of HAHL as at 31 December 2017, as released on SENS on 31 July
       2018.
    2. The pro forma adjustment illustrates the effect of the General Offer on HAHL's EPS and
       HEPS as if the General Offer had become effective on 1 January 2017. The "After the
       General Offer" column takes into account the following as it relates to EPS and HEPS:
          (a) the estimated transaction costs being R10.3 million that are deemed not tax
              deductible. These costs are not expected to have a continuing effect on HAHL’s
              consolidated statement of comprehensive income i.e. 'once-off' in nature. These
              costs have mainly been incurred concurrently given the concurrent nature of the
              Scheme and General Offer, as such it is not practical to accurately split the
              transaction costs between the Scheme and General Offer.
    3. The adjustments illustrate the effect of the General Offer on HAHL's NAVPS and TNAVPS
       as if the General Offer had been implemented on 31 December 2017 for purposes of the
       statement of financial position. The "After the General Offer" column takes into account
       the following adjustments and assumptions:
          (a) the estimated transaction costs being R10.3 million which have been expensed; and
          (b) the reduction of R10.3 million of cash resources relating to transaction costs
              incurred.
    4. There are no treasury shares in issue. No shares were issued during the period (i.e. the
       weighted average number of shares and number of shares in issue are equal).
    5. There are no other subsequent events that require adjustments to the pro forma financial
       information.


8.2.2.   Pro forma financial information of the General Offer based on the financial statements for
         the six months ended 30 June 2018 in compliance with paragraph 8.25(b) of the Listings
         Requirements:
         8.2.2.1. The table below sets out the pro forma financial information of the General Offer
                  based on the financial statements for the six months ended 30 June 2018 and
                  have been prepared for illustrative purposes only, in order to provide information
                  about how the General Offer might have affected Shareholders had the General
                  Offer been implemented on the dates indicated in the notes below.
         8.2.2.2. Due to its nature, the pro forma financial information may not fairly present the
                  financial position, or results of operations of HAHL after the General Offer. The
                  preparation of the pro forma financial information is the responsibility of the
                  directors of HAHL.
         8.2.2.3. The pro forma financial information has been prepared in accordance with the
                  Listings Requirements and the guide on pro forma financial information issued
                  by the South African Institute of Chartered Accountants. The accounting policies
                  used in compiling the pro forma financial information complies with IFRS and are
                  consistent with those applied in compiling the unaudited restated annual financial
                  statements for the year ended 31 December 2017, with the exception of the
                  adoption of IFRS 15 - Contracts with customers, as per the SENS announcement
                  on 31 July 2018 and the unaudited interim financial statements for the six months
                  ended 30 June 2018.
                                                        Before the        After the
                                                       General Offer    General Offer
                                              Notes        (1)               (5)        Effect %
For the six months ended 30 June 2018:
  Basic and diluted EPS (cents)                   2           131.12           115.41     (12%)
  Basic and diluted HEPS (cents)                  2           131.13           115.42     (12%)
As at 30 June 2018:
  NAVPS (cents)                                   3          2 470.12        2 454.42      (1%)
  TNAVPS (cents)                                  3          2 406.78        2 391.08      (1%)


Total number of shares in issue ('000)            4           65 729           65 729        0%

Total weighted average number of shares in
issue ('000)                                      4           65 729           65 729        0%
Notes:
     1. The "Before the General Offer" column is based on the unaudited condensed consolidated
        statement of comprehensive income of HAHL for the six months ended 30 June 2018 and
        the unaudited condensed consolidated statement of financial position of HAHL as at
        30 June 2018.
     2. The pro forma adjustment illustrates the effect of the General Offer on HAHL's EPS and
        HEPS as if the General Offer had become effective on 1 January 2018. The "After the
        General Offer” column takes into account the following relating to EPS and HEPS:
           (a) the estimated transaction costs being R10.3 million that are deemed not tax
               deductible. These costs are not expected to have a continuing effect on HAHL’s
               consolidated statement of comprehensive income i.e. 'once-off' in nature. These
               costs have mainly been incurred concurrently given the concurrent nature of the
               Scheme and General Offer, as such it is not practical to accurately split the
               transaction costs between the Scheme and General Offer.
     3. The adjustments illustrate the effect of the General Offer on HAHL's NAVPS and TNAVPS
        as if the General Offer had been implemented on 30 June 2018 for purposes of the
        statement of financial position. The "After the General Offer” column takes into account
        the following adjustments and assumptions:
           (a) the estimated transaction costs being R10.3 million which have been expensed; and
           (b) the reduction of R10.3 million of cash resources relating to transaction costs
               incurred.
     4. There are no treasury shares in issue. No shares were issued during the period (i.e. the
        weighted average number of shares and number of shares in issue are equal).
     5. There are no other subsequent events that require adjustments to the pro forma financial
        information.

9.   CIRCULAR AND SALIENT DATES

HAHL and HGSAL will issue a combined circular to Shareholders, containing full terms and
conditions of the Scheme and General Offer and notice to convene the General Meeting
(“Circular”).

The Circular is expected to be posted on or about Tuesday, 13 November 2018.
Shareholders are advised to refer to the Circular for the full terms of and conditions of, including
related salient dates and times, the Scheme and General Offer.

10. GENERAL

Colfax, HGSAL and JH&G are deemed to be acting in concert with HAHL in terms of the Companies
Regulations and have therefore made declarations in the required form to HAHL and the TRP, as
required by Regulation 84(5) of the Companies Regulations.
HGSAL confirms that it is the ultimate proposed purchaser of all the General Offer Shares and that
it is not acting as agent or broker for any other party. Save for Colfax, JH&G and HAHL, no other
party is acting in concert with HGSAL.

11. SHAREHOLDING

Colfax, through HGSAL and JH&G (who act in concert with HAHL) is the ultimate indirect beneficial
owner of 36 408 743 HAHL Shares, which represents 55.39% of the issued ordinary share capital
of HAHL.

12. FUNDING AND CASH GUARANTEES

The funds to settle the Scheme Consideration and/or the General Offer Consideration are in place,
and HAHL and HGSAL have each delivered to the TRP an irrevocable, unconditional bank
guarantee issued by The Standard Bank of South Africa Limited (acting through its Corporate and
Investment Banking division) (“Funder”), for the maximum possible Scheme Consideration or the
General Offer Consideration, in compliance with regulations 111(4) and 111(5) of the Companies
Regulations.

13. THE INDEPENDENT BOARD AND BOARD RESPONSIBILITY STATEMENT

The Board and the Independent Board:
*   accept responsibility for the information contained in this announcement;
*   confirm that to the best of each member’s respective knowledge and belief, the information
    contained in this announcement relating to HAHL is true; and
*   confirm that this announcement relating to HAHL does not omit anything likely to affect the
    importance of the information relating to the Scheme and General Offer.


14. HGSAL RESPONSIBILITY STATEMENT

HGSAL:
*   accepts responsibility for the information contained in this announcement;
*   confirms that to the best of its knowledge and belief, the information contained in this
    announcement relating to HGSAL is true; and
*   confirms that this announcement relating to HGSAL does not omit anything likely to affect
    the importance of the information relating to the General Offer.

15. TRADING STATEMENT

Shareholders are referred to the Trading Statement released on SENS on Monday, 22 October
2018 regarding an update on the expectations of the HAHL group of companies consolidated
financial results for the twelve months ended for 31 December 2018.

16. WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT

Further to the information set out in this Firm Intention Announcement, the Cautionary
Announcement is hereby withdrawn and caution is no longer required to be exercised by
Shareholders when dealing in the HAHL Shares.

Johannesburg
24 October 2018

Corporate Advisor: Deloitte Capital Proprietary Limited

Transaction Sponsor: Deloitte & Touche Sponsor Services Proprietary Limited

Legal Advisor: Webber Wentzel

Independent Expert: Mazars Corporate Finance Proprietary Limited

Independent Reporting Accountant and Auditor: Ernst & Young Inc.

Funder: The Standard Bank of South Africa Limited (acting through its Corporate and Investment
Banking division)

Date: 24/10/2018 04:13:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). 
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 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.

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