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AEL: ALLIED ELECTRONICS CORPORATION LIMITED - Acquisition of Lawtrust Acquisition of Lawtrust ALLIED ELECTRONICS CORPORATION LIMITED (Registration number 1947/024583/06) (Incorporated in the Republic of South Africa) Share code: AEL ISIN: ZAE000191342 ("Altron" or "Altron Group" or "the Company") ACQUISITION OF LAWTRUST - CATEGORY 2 TRANSACTION 1. INTRODUCTION Stakeholders are advised that a wholly owned subsidiary of the Altron Group, namely Altron TMTSA Group Proprietary Limited ("Altron TMTSA") has entered into an agreement ("Agreement") with Etion Limited, a South African public company listed on the Johannesburg Stock Exchange with Registration Number 1987/001222/06 ("Etion"), in terms of which Etion will sell and Altron TMTSA will acquire 100% of the issued shares in Law Trusted Third Party Services Proprietary Limited ("Lawtrust"). Lawtrust is a wholly owned subsidiary of Etion. 2. DESCRIPTION OF THE ASSET TO BE ACQUIRED Lawtrust is a digital trust services, cyber information security solutions provider. Lawtrust´s solutions include: - Authentication - products and services used to verify the authenticity of digital identities and counterparty systems in transactions; - Encryption - of data sent and received over secure online environments with Secure Socket Layer certificates, as well as the encryption of information sent via email; - Digital signatures - to enable the digitalisation of business through legally enforceable electronic and digital signatures for approvals and electronic contracting; and - Biometrics - solutions that utilise a variety of modalities for identity verification and identification. These include fingerprint and facial recognition technologies. Lawtrust provides services to over 500 clients in the private and public sectors. Lawtrust is considered to be one of the leading cyber and information security companies in South Africa, providing for a range of solutions within the sector. Lawtrust was the first accredited authentication service provider in the country, authorised in terms of the Electronic Communication and Transactions Act 25 of 2002 and the only accredited private company to provide advanced electronic signature solutions. It is an internationally certified Certificate Authority undergoing both WebTrust and ISO 21188 audits for the provision of publicly trusted digital certificates and digital signatures. 3. RATIONALE FOR THE ACQUISITION Altron´s position in the IT security sector was significantly strengthened in March 2020 by the acquisition of identity and data specialists Ubusha Technologies ("Ubusha"). Ubusha has since enhanced Altron´s security capabilities in cloud and managed security operations ("Altron Security"). The acquisition of Lawtrust coupled with the fulfilment capability of Altron Security will result in enhanced IT security service offerings which include but is not limited to: enabling the acceleration of its customer´s digital transformation journey; increasing the ability to transact digitally through sound identity security; embedding security controls to improve digital customer experiences whilst complying with evolving IT security legislative requirements; The Lawtrust acquisition brings complimentary capabilities which include the ability to proof identities of workforce, consumers, citizens and devices and the legal non-repudiation through digital signatures and encryption. Altron offers the geographic footprint and extensive customer base to support Lawtrust in their continued growth trajectory. Lawtrust owns and develops its own intellectual property which it uses in combination with third party solutions to deliver services to its clients and Lawtrust has an annuity base of 70%. The Board is of the opinion that the acquisition of Lawtrust will enhance Altron´s IT security capabilities, accelerate its market positioning and provide a strong platform for the growth of Altron. 4. ACQUISITION CONSIDERATION The acquisition consideration of R245 million, subject to certain adjustments, is payable by Altron TMTSA to Etion as follows: - with effect from the Effective Date (as defined below), payment of R185 million; - R30 million (subject to the potential adjustment relating Lawtrust´s net debt and working capital as at the Effective Date) to be paid to Etion within 10 business days of the certification or determination of the closing accounts in accordance with the Agreement; and - R30 million to be paid to Etion on the first anniversary of the Effective Date less any legitimate warranty, indemnity and other potential claims under the Agreement. 5. SOURCE OF THE ACQUISITION CONSIDERATION The consideration price for the acquisition of Lawtrust shall be funded from existing resources. 6. CONDITIONS PRECEDENT The acquisition is subject to the fulfilment or waiver of the following outstanding conditions precedent ("Conditions Precedent") by no later than 15 July 2021, or such date as may be agreed in writing by the parties: - Etion obtaining approval from its shareholders for the disposal of Lawtrust pursuant to the JSE Listings Requirements; - Etion obtaining approval from its shareholders for the disposal of Lawtrust in terms of section 112 read with section 115 of the Companies Act 71 of 2008 ("Companies Act"); - Etion and the Altron Group obtaining all necessary approvals, including any regulatory or statutory approvals as may be required for the purposes of completing the transaction including the approval of the Competition Authorities; - Etion and Lawtrust obtaining such necessary notifications and/or approvals in terms of Lawtrust´s corporate and contractual arrangements as may be required for the purposes of completing Altron´s acquisition of Lawtrust; and - other conditions precedent that are customary for a transaction of this nature. 7. EFFECTIVE DATE OF THE ACQUISITION The Effective Date of the acquisition is the first day of the calendar month following the calendar month in which the last of the Conditions Precedent has been completely fulfilled or duly waived, to the extent capable of waiver in law, unless Etion and Altron otherwise agree in writing. 8. FINANCIAL INFORMATION The value of the net assets of Lawtrust as at 30 September 2020, was R102 million. The unaudited and unreviewed segment profit attributable to Lawtrust for the 6 months period ended 30 September 2020, was R21 million (including intra-group charges). 9. WARRANTIES AND OTHER SIGNIFICANT TERMS OF THE AGREEMENT The Agreement contains indemnities and warranties provided by Etion in favour of Altron which are standard for a transaction of this nature. 10. CLASSIFICATION OF THE ACQUISITION The acquisition of Lawtrust by the Altron Group constitutes a category 2 transaction in terms of the JSE Listings Requirements. 11. OTHER The Company confirms, for purposes of paragraph 9.16 of the JSE Limited Listings Requirements, that nothing in the constitutional documents of Lawtrust will, in anyway, frustrate or relieve Altron from its compliance with the JSE Limited Listings Requirements. Shareholders will be notified once the conditions precedent have been fulfilled. Johannesburg 20 April 2021 Sponsor: Investec Bank Limited Date: 20-04-2021 09:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of 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.