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 Dosco Precision Hydraulics, a division of Hudaco Trading (Pty) Limited,
     which is an 85% held subsidiary of Hudaco, has renewed its lease agreement (“Lease Agreement”) with
     Dufomo Investments Proprietary Limited (“Dufomo”) for a further period of five years, in terms of which
     Dosco Precision Hydraulics will continue to lease premises located at 6 Impangela Road, Sebenza Ext 6,
     Edenvale (“the Premises”) from Dufomo as set out in paragraph 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 Dosco Precision Hydraulics, which has
     been renting these premises from Dufomo for over 18 years. The buildings and structures on the Premises
     are well suited to the requirements of the business and the business already occupied the Premises
     before being acquired by Hudaco during 2013.

3.   DETAILS AND TERMS OF THE LEASE RENEWAL

     In terms of the Lease Agreement, Dosco Precision Hydraulics will lease the Premises for a further period
     of five years from the commencement date of 1 May 2022. The monthly rentals payable in respect of the
     Premises, which includes escalations of 7% in May 2023 and May 2024 and 8% in May 2025 and May
     2026, are set out in the table below:

      Period                                                 Monthly rental*           Monthly rental per m2
                                                             (excluding VAT)                (excluding VAT)
                                                                         (R)                              (R)
      1 May 2022 to 30 April 2023                                 168 000.00                           70.00
      1 May 2023 to 30 April 2024                                 179 760.00                           74.90
      1 May 2024 to 30 April 2025                                 192 343.20                           80.14
      1 May 2025 to 30 April 2026                                 207 730.66                           86.55
      1 May 2026 to 30 April 2027                                 224 349.11                           93.48

     *   Monthly rental is inclusive of rates and taxes, insurance, exterior maintenance and covered and open
         parking.

     Dosco Precision Hydraulics is a supplier and repairer of hydraulic pumps and motors to the mining,
     industrial, mobile, marine and forestry industries. The Premises, which are split into two units, comprise
     515m2 of offices and 1 885m2 of warehouse space (including mezzanine of 153m2). The Premises further
     include five 1-tonne gantry cranes, two 750kg gantry cranes, a 1-tonne hoist, a 2-tonne hoist, a pulley
     lift and an oil sump drainage system, all of which belong to the landlord.

     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 to be 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 considered a “small related party transaction” in terms of
     paragraph 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
     Company Secretary at natashad@acorim.co.za

Johannesburg
6 September 2022

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

Independent Expert
Merchantec Capital