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 (Pty) Ltd (“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 29 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 5 662.5m2 in aggregate, with effect from 1 August 2023
     (“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%, are set out in the table below:

     Period                                                    Monthly rental
                                                               (excluding VAT)
     1 August 2023 to 31 July 2024                             R381 935.63
     1 August 2024 to 31 July 2025                             R412 490.48
     1 August 2025 to 31 July 2026                             R445 489.71

     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. Except for a right-of-use asset determined in terms of IFRS 16, there are
     no assets attributable to the Lease Renewal

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 natashad@acorim.co.za.

Johannesburg
13 November 2023

Corporate advisor and Sponsor
Nedbank Corporate and Investment Banking, a division of Nedbank Limited

Independent Expert
Merchantec Capital