ETION LIMITED
 (Incorporated in the Republic of South Africa)
 (Registration Number: 1987/001222/06)
 (Share Code: ETO)
 (ISIN: ZAE000097028)
 (“Etion” or “the Company” or “the Group’’)


CATEGORY 1 DISPOSAL ANNOUNCEMENT AND WITHDRAWAL OF CAUTIONARY
ANNOUNCEMENT


1.     INTRODUCTION

       Shareholders are advised that the Company has entered into an agreement
       (“Agreement”) with, inter alios, Reunert Applied Electronics Holdings Proprietary Limited
       (“the Purchaser”), in terms of which Etion will sell 100% of the issued shares in Etion
       Create Proprietary Limited (“Etion Create”) (“Sale Shares”) to the Purchaser for the
       Purchase Price set out in paragraph 4 below (“Disposal”).

2.     DESCRIPTION OF ETION CREATE

       Etion Create is a leading Original Design Manufacturing company, specialising in the
       design, manufacturing, integration and support of advanced technology.

       Etion Create is able to create customised electronic subsystems and products for clients
       across a range of sectors including Mining and Industrial; Defense and Aerospace;
       Internet of Things (IoT) and Sensors; and Cyber Security.

3.     RATIONALE FOR THE DISPOSAL

       The strategy of the Company’s Board as adopted in 2020 was to unlock shareholder value
       by selling off the operating entities as the market capitalisation of the Group at the time
       was trading at a significant discount to the underlying intrinsic value of the operating
       entities when viewed as a whole. It is within this context that the Disposal has been
       concluded.

4.     PURCHASE PRICE

     The Purchase Price will be calculated as set out below. It is currently expected that the
     Purchase Price will amount to approximately R197 million, excluding: 1) the successful
     payment of a receivable in the amount of R2.56 mil by a customer of Etion Create prior to
     closing and 2) interest to be accrued on the Purchase Price from the Effective Date to
     Closing Date (as defined in paragraphs 7 and 4.1 respectively). The maximum price
     purchase price will not exceed R210 million.

4.1.      Determination of the Purchase Price:

          The Purchase Price will be finally determined as set out below ten business days prior
          to the Closing Date. ”Closing Date” refers to the first business day in the month
         following the month in which the last of the Conditions Precedent (as set out below)
         has been fulfilled, or such later date as may be provided for in the Agreement.

4.1.1.        The enterprise value of the Sale Shares as at the Effective Date (as defined in
              paragraph 7 below) is initially agreed to be the amount of R168 million, being the
              assumed value of the entire issued share capital of Etion Create, on a cash-free
              and debt-free basis (“Initial Enterprise Value”).
         4.1.2. The Initial Enterprise Value shall be increased or reduced (as the case may be)
              by certain net debt and net working capital adjustments. The net debt adjustment
              will be determined using the debt less cash and cash equivalents as reflected in
              the audited annual financial statements of Etion Create for the financial year
              ending on 31 March 2022 (“2022 Accounts”). The net working capital adjustment
              will be determined using the final audited net working capital as at 31 March 2022
              less the normalised net working capital peg for the proceeding financial year
              (“Final Enterprise Value”).
         4.1.3. The Purchase Price payable by the Purchaser will be the Final Enterprise
              Value, as further increased or reduced (as the case may be) by certain payments
              and receivables between the Effective Date and Closing Date (“Purchase
              Price”).
         4.1.4. Ten business days prior to the Closing Date, the Company shall provide the
              Purchaser with the purchase price calculation (“Closing Date Purchase Price
              Calculation”). The Purchaser will have five business days to review the Closing
              Date Purchase Price Calculation and notify the Company whether it agrees with
              the Closing Date Purchase Price Calculation or not.
         4.1.5. If the Purchaser is in agreement with the Closing Date Purchase Price
              Calculation, the Purchaser shall make payment of the Purchase Price as
              contemplated in paragraph 4.2 below.
         4.1.6. If the Purchaser is not in agreement with the Closing Date Purchase Price
              Calculation, it will provide the Company with its calculation of the Purchase Price
              whereafter the Parties will try to resolve the differences within the ensuing 5 (five)
              Business Days. If unresolved, the matter will be referred to an independent expert
              (“Independent Expert”) for final determination.

     4.2. Payment of the Purchase Price

         Once the Purchase Price has been agreed or determined as set out above, on the
         Closing Date:
         4.2.1. The Purchaser shall pay the “Initial Purchase Price” (being the Purchase
              Price less the Retention Amount referred to in the paragraph below), in cash
              directly to the Company; and
         4.2.2. an amount of R5 million (the “Retention Amount”) will be paid into a trust
              account in order to satisfy any warranty claims instituted by the Purchaser. The
              Retention Amount will be paid to the Company on or about the second
              anniversary of the Effective Date, less any legitimate warranty, indemnity and
              other potential claims under the Agreement which are accepted and conceded by
              the Company.


5.   APPLICATION OF THE PURCHASE PRICE

     It is envisaged that, subsequent to the review and consideration of operational cash
     requirements and a comprehensive review of the Company’s remaining known
     obligations and liquidity position, the net proceeds less the Retention Amount will be made
     available for distribution to shareholders.
6.   CONDITIONS PRECEDENT

     The Disposal is subject to the fulfilment (or, where applicable, waiver) of the following
     outstanding conditions precedent (“Conditions Precedent”) by no later than
     20 November 2022, being the sixth month anniversary of the signature date of the
     Agreement (“Signature Date”), or such date as may be agreed in writing by the parties:


        6.1.1. the Company shall have delivered to the Purchaser an ordinary resolution of
             the shareholders of the Company approving the conclusion of this Agreement
             pursuant to the JSE Listings Requirements;
        6.1.2. the Company shall have delivered to the Purchaser a special resolution of the
             shareholders of the Company approving the conclusion of this Agreement and
             the transactions contemplated in this Agreement in terms of section 112 read with
             section 115 of the Act;
        6.1.3. Etion Create shall have provided to the Purchaser a letter from Nedbank
             Limited, or any of its other funders, in terms of which Nedbank Limited or such
             other funders releases Etion Create from, and terminates any cross-suretyships,
             cession and pledge of debtors books, guarantees and any and all security
             arrangements, including encumbrances and any other contractual commitments
             but excluding any Permitted Encumbrances (defined as encumbrances in the
             ordinary course of business), given by, the Company and/or Etion Create in
             favour of Nedbank Limited or such other funders or person;
        6.1.4. the Company and/or Etion Create shall have obtained all necessary written
             consents and waivers (for the avoidance of doubt, this shall include, without
             limitation, waivers in respect of any termination rights provided for under defined
             material contracts on an unconditional basis, and shall have provided the
             requisite notices to the relevant counterparties, pursuant to any change in control
             provisions, B-BBEE or any other provisions requiring such notification and/or
             consent, in terms of the defined material contracts;
        6.1.5. the Company and/or Etion Create shall have provided written confirmation to
             the Purchaser that all intra-group and related party arrangements and
             agreements are terminated and all intra-group receivables owing to Etion Create
             are settled in full;
        6.1.6. the Company shall have obtained all necessary consents required to assign
             and/or transfer all the Intellectual Property held by the Company and as may be
             required to conduct the business of Etion Create, to the Purchaser and shall have
             transferred such Intellectual Property to Etion Create on or about the 31 March
             2022;
        6.1.7. Etion Create shall have negotiated and concluded employment contracts with
             certain key personnel within ninety days of the Signature Date, on terms
             satisfactory to the Purchaser, including appropriate restraint of trade provisions;
        6.1.8. Etion Create shall deliver and release to the Company and the Purchaser the
             2022 Accounts;
        6.1.9. no Material Adverse Change (defined as a material adverse change in the
             condition (financial, trading or otherwise), prospects, results of operations,
             business or general affairs of the Company, including the cancellation of a
             Material Contract) shall have occurred between the Signature Date and the
             Closing Date;
        6.1.10. Etion Create shall have received the outstanding contracting and export
             permits relating to two export contracts;
        6.1.11. the Parties shall have obtained the approval of the Competition Authorities; and
        6.1.12. other conditions precedent that are customary for a transaction of this nature.


7.   EFFECTIVE DATE OF THE DISPOSAL

     Subject to the Conditions Precedent being fulfilled or waived (where applicable), the
     Disposal will be implemented on the Closing Date. Notwithstanding this, subject to the
     payment by the Purchaser of the Purchase Price on the Closing Date, i) all risks in and
     benefits arising out of the Disposal shall be deemed to have passed to the Purchaser with
     effect from 1 April 2022 (“Effective Date”), and ii) ownership of the Sale Shares shall pass
     to the Purchaser on the Closing Date.

8.   FINANCIAL INFORMATION

     The value of the net assets of Etion Create as at 30 September 2021, being the date of
     the Company’s most recent interim financial results, was R159.4 million.

     The profits attributable to Etion Create for the six months ended 30 September 2021 was
     R15.7 million, based on the interim financial results for the Company.

     The aforementioned interim financial statements are unreviewed and unaudited, and were
     prepared in terms of IFRS.

9.   WARRANTIES AND OTHER SIGNIFICANT TERMS OF THE AGREEMENT

     The Agreement contains indemnities and warranties given by the Company in favour of
     the Purchaser which are standard for a transaction of this nature.

10. CLASSIFICATION OF THE DISPOSAL

     As the value of the Disposal exceeds 50% of the Company’s market capitalisation as at
     the Signature Date, it meets the definition of a category 1 transaction as contemplated in
     section 9 of the JSE Limited Listings Requirements. As such, the Disposal is required to
     be approved by an ordinary resolution of the Company’s shareholders, which will require
     the support of more than 50% (fifty per cent) of the votes exercised on it.

     In addition, the Disposal is regarded as a disposal of the greater part of the assets or
     undertaking of the Company in terms of section 112 of the Companies Act and therefore
     constitutes an "affected transaction" as define in section 117(1)(c)(i) of the Companies
     Act. As such, the Disposal required to be approved by way of a special resolution of the
     Company’s shareholders, which will require the support of at least 75% (seventy-five per
     cent) of the votes exercised on it.

11. INDEPENDENT BOARD

     The Company has constituted an independent board which consists of Martie Janse van
     Rensburg, Steve Naude and Zuziwe Ntsalaze (“the Independent Board”). The
     Independent Board will appoint an independent expert to provide the Independent Board
     with external advice regarding the Disposal and to compile a fair and reasonable opinion
     on the Disposal in terms of the Companies Regulations, 2011.
12. CIRCULAR

    A circular containing the full details of the Disposal and incorporating a notice convening
    the required general meeting of the shareholders of the Company, will be distributed to
    shareholders in due course, at which time the salient dates and times of the Disposal,
    including the date of the general meeting, will be announced on SENS.

13. WITHDRAWAL OF CAUTIONARY

    Shareholders are referred to the Company’s cautionary announcement on 17 February
    2022, as renewed on 1 April 2022.

    Shareholders are hereby advised that as the particulars of the Disposal have now been
    announced, caution is no longer required to be exercised by shareholders when dealing
    in the Company’s securities.

14. INDEPENDENT BOARD RESPONSIBILITY STATEMENT


    The Independent Board of the Company:
   14.1.     have considered all statements of fact and opinion in this announcement;
   14.2.     accept, individually and collectively, full responsibility for the accuracy of the
       information given;
   14.3.     certify that, to the best of their knowledge and belief, there are no omissions of
       material facts or considerations which would make any statement of fact or opinion
       contained in this document false or misleading;
   14.4.     have made all reasonable enquiries in this regard; and
   14.5.     confirm that this announcement contains all information required by the
       Takeover Regulations set out in Chapter 5 of the Companies Act.


20 May 2022

Transactional Sponsor and Designated Adviser

PSG Capital