DIS-CHEM PHARMACIES LIMITED - Announcement Regarding A Small Related Party Transaction

Announcement Regarding A Small Related Party Transaction

Dis-Chem Pharmacies Limited
(Incorporated in the Republic of South Africa)
(Registration number 2005/009766/06)
JSE share code: DCP ISIN: ZAE000227831
("Dis-Chem" or "the Company" or "the Group")

ANNOUNCEMENT REGARDING A RELATED PARTY TRANSACTION BETWEEN DIS-CHEM DISTRIBUTION
PROPRIETARY LIMITED AND COLUMBIA FALLS PROPERTIES 7 PROPRIETARY LIMITED

1.   Introduction

     Shareholders are advised that Dis-Chem Distribution Proprietary Limited ("Dis-Chem Distribution" or
     "Purchaser"), a wholly-owned subsidiary of Dis-Chem, has entered into a sale and purchase agreement
     relating to the following acquisition:

     100% of the issued share capital and claims in Columbia Falls Properties 7 Proprietary Limited ("Columbia
     Falls"), which company's main assets are Erf 848 Halfway House Ext 119 and Erf 592-593 Halfway House Ext
     81, situated at 23 Stag Road, Glen Austin, Midrand, from The Directors Adventures Trust (the "Seller") for an
     unadjusted purchase consideration of R478 592 342 ("the Transaction"). Columbia Falls is a rental property
     company and houses the Midrand distribution centre as well as the head office premises of Dis-Chem and
     currently earns a monthly rental from Dis-Chem.

2.   Rationale for the Transaction

     Dis-Chem is a group of companies specialising in the retail and distribution of pharmacy and healthcare
     products. The Transaction will ensure that Dis-Chem owns all its core distribution centres, as well as its head
     office premises in Midrand. The ownership of the asset is a long term strategic objective of the Group that
     has a positive impact on the income statement and a minimal impact on the balance sheet.

3.   Related parties

     The Seller is an associate of certain directors and prescribed officers of Dis-Chem, who collectively are also
     material shareholders of Dis-Chem (as defined in section 10.1(b)(vii) of the JSE Limited Listings Requirements
     ("JSELR") read together with the definition of associate).

     The directors and prescribed officers of Dis-Chem who have a financial interest are:
         • Ivan Saltzman;
         • Lynette Saltzman;
         • Saul Saltzman;
         • Stanley Goetsch;
         • Brian Epstein; and
         • Kevin Sterling.

     In terms of Section 10.7 of the JSELR, the Transaction is categorised as a small related party transaction.

4.   Net asset value

     The value of the net assets (excluding the deferred tax liability) and profit before tax for the four months
     ended 30 June 2023 attributable to the Transaction based on management accounts prepared in terms of
     IFRS as at 30 June 2023, are R 478,6 million and R14,5 million respectively.

     The Board has satisfied itself as to the quality of the management accounts referred to above.

5.   Conditions precedent

     The effective date of the Transaction is the last day of the calendar month during which the last of the
     conditions precedent is fulfilled upon which date consolidation into the Group will occur.
     The Transaction agreement is subject to the fulfilment of various conditions precedent, the most significant
     of which are:

     •    The approvals of the Competition Authorities required in terms of the Competition Act;
     •    Acceptance by the JSE of the independent fairness opinion referred to below;
     •    The agreements recently concluded between the Seller, Columbia Falls and the current co-
          shareholders of Columbia Falls having become effective and having been implemented in accordance
          with their terms, in order to enable the Seller to perform its obligations under the Transaction; and
     •    Dis-Chem having concluded the required funding agreement with its bankers, and such agreement
          having become unconditional in accordance with its terms.

6.   Independent fairness opinion

     In terms of the JSELR, the Company is required to provide the JSE with written confirmation from an
     independent professional expert confirming whether the terms and conditions of the Transaction are fair to
     Dis-Chem's Shareholders.

     In compliance with paragraph 10.7(b) of the JSELR, BDO Corporate Finance Proprietary Limited ("BDO") was
     appointed by the Company as the independent professional expert and has furnished the Dis-Chem board of
     directors with its opinion ("Independent Expert Opinion") confirming that the terms of the Transaction are
     fair to Dis-Chem's Shareholders.

     The Independent Expert Opinion has been sent to the JSE for approval. Shareholders will be advised further
     in this regard.

     Midrand
     25 January 2024

     N Lumley
     Company Secretary

     Sponsor
     The Standard Bank of South Africa Limited

     Independent Expert
     BDO Corporate Finance

Date: 25-01-2024 05:15:00
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