PINNACLE : CONCLUDES ITS BROAD-BASED BLACK ECONOMIC EMPOWERMENT TRANSACTION

PINNACLE HOLDINGS LIMITED

(Incorporated in the Republic of South Africa)

(Registration number: 1986/000334/06)

JSE code: PNC ISIN: ZAE000184149

('Pinnacle' or 'the Company' or 'the Group')

PINNACLE CONCLUDES ITS BROAD-BASED BLACK ECONOMIC EMPOWERMENT TRANSACTION

Introduction

Shareholders are referred to the announcement on SENS on 27 June 2016 ('First Announcement'). Unless indicated otherwise below, the defined terms in the First Announcement shall bear the same meaning in this announcement.

In terms of the First Announcement, shareholders were inter alia advised that:

- the Board resolved to pursue a B-BBEE ownership transaction, which includes a group restructure through its wholly-owned subsidiary DCT Holdings ('Group Restructure') prior to the implementation of the Proposed B-BBEE Transaction ('B-BBEE Transaction'); and

- a broad-based trust to be known as the Pinnacle Foundation Trust will, through its wholly-owned subsidiary being the Pinnacle Foundation (RF) Proprietary Limited, act as the B-BBEE partner to the B-BBEE Transaction and will subscribe for 29,9% of the ordinary issued shares in DCT Holdings ('B-BBEE Shares').

Conclusion of transaction agreements and fulfilment of conditions precedent

Further to the above, the Board is pleased to advise that:

- Pinnacle acted as founder ('Founder') for the establishment of the Pinnacle Foundation Trust and that the Pinnacle Foundation Trust has been duly established and registered at the Master's Office with registration number IT 001920/2016(T) ('Pinnacle Foundation Trust');

- Pinnacle Foundation (RF) Proprietary Limited has been duly incorporated with the Companies and Intellectual Property Commission ('CIPC') with registration number 2016/307601/07 ('Pinnacle Foundation (RF) Proprietary Limited');

- Confirmation was received from CIPC that DCT Holdings has adopted a new memorandum of incorporation which was required to facilitate the Preference Share Subscription and the B-BBEE Subscription as detailed below; and

- the appropriate agreements relating to the Group Restructure, the Preference Share Subscription and the B-BBEE Subscription were duly concluded and have become unconditional.

Objectives

The B-BBEE Transaction has been structured to meet the following objectives:

- pursue real and sustainable empowerment aimed at empowering previously disadvantaged stakeholders with a focus on broad-based groupings;

- create a sustainable and non-complex funding structure which is not reliant on external bank funding, share price appreciation or dividend payments;

- materially improve DCT Holdings and its subsidiaries' ('DCT Holdings Group') B-BBEE ownership credentials;

- complement existing B-BBEE initiatives; and

- preserve existing value for current shareholders.

Identity of the B-BBEE partner and its beneficiaries

The Pinnacle Foundation Trust through its wholly owned subsidiary, Pinnacle Foundation RF Proprietary Limited, will act as the B-BBEE partner.

In terms of the trust deed of the Pinnacle Foundation Trust, the Founder is responsible for the appointment of the relevant trustees of which at least 50% are to be independent from the Founder, at least 50% are to be black people and at least 25% are to be black women.

The beneficiaries of the Pinnacle Foundation Trust will include amongst others persons and/or entities and/or institutions and/or initiatives falling in one or more or all of the following categories:

- any primary, secondary and tertiary schools and/or any education initiatives;

- any initiatives that may include the donation of equipment applied in the ICT sectors, infrastructure related projects (including but not limited to repairs to schools/buildings), provision of sporting facilities, cash and time donations to identified charities, communities, sport clubs, healthcare providers, general food or nutrition provision, general welfare organisations aimed at the betterment of communities identified (including but not limited to clean-up projects, general upliftment projects, healthcare improvements);

- emerging entrepreneurs and/or emerging suppliers directly or indirectly in the ICT sector, and any entities or institutions or initiatives established for the benefit of such persons;

- DCT Holdings' workers and their families, and any entities or institutions or initiatives established for the benefit of such persons;

- any potential future employee of the Pinnacle Group seeking to further his/her education; and

- any other individual/s or group/s of people or entity/ies forming part of, or that operate for an educational or other public benefit purpose within the communities in which the DCT Holdings Group operates, or of which its employees are members, provided that, in line with the applicable B-BBEE legislation, 100% of distributions to further the Pinnacle Foundation Trust's objectives will be used to benefit black people of which 100% of all such distributions will be expended directly for the benefit of black women for the first 3 (three) financial years of the Pinnacle Foundation Trust's existence whereafter at least 40% of such distributions will be expended directly for the benefit of black women.

Salient features of the B-BBEE Transaction

In order to facilitate the B-BBEE Transaction and as part of the Group Restructure, Pinnacle consolidated its South African operating assets under DCT Holdings prior to the implementation of the B-BBEE Transaction.

Prior to the B-BBEE Subscription and in order to retain existing value for Pinnacle shareholders as well as to enable Pinnacle Foundation (RF) Proprietary Limited (on behalf of the Pinnacle Foundation Trust) to subscribe for the B-BBEE shares at a nominal value:

- Pinnacle subscribed for 29 000 (twenty nine thousand) cumulative redeemable non-participating preference shares ('Preference Shares') in DCT Holdings for a subscription price of R100 000 (one hundred thousand Rand) per Preference Share which attracts a dividend yield of prime plus 3% ('Preference Share Subscription');

- the board of directors of DCT Holdings declared a special distribution to Pinnacle in the gross amount of R2 460 925 134.82 (two billion four hundred and sixty million nine hundred and twenty five thousand one hundred and thirty four Rand and eighty two cents) ('Special Distribution') which comprised:

- a dividend in the amount of R2 410 446 236.82 (two billion four hundred and ten million four hundred and forty six thousand two hundred and thirty six Rand and eighty two cents) declared by DCT Holdings to Pinnacle; and

- a distribution, being a return of capital, in the amount of R50 478 898.00 (fifty million four hundred and seventy eight thousand eight hundred and ninety eight Rand) made by DCT Holdings to Pinnacle which was made out of the 'contributed tax capital' (as such term is defined in section 1 of the Income Tax Act, 58 of 1962) of DCT Holdings;

- Pinnacle and DCT Holdings agreed to make payment of and discharge their respective payment obligations by setting off the obligations against each other; and

- The existing inter-group loan accounts between DCT Holdings and Pinnacle Treasury ('Pinnacle Treasury Loan') and Pinnacle Treasury and Pinnacle were settled.

The Special Distribution Amount effectively represents the equity market value of DCT Holdings net of the Pinnacle Treasury Loan and other existing debt of DCT Holdings.

Accordingly, subsequent to the Preference Share Subscription and the Special Distribution, Pinnacle Foundation (RF) Proprietary Limited (on behalf of the Pinnacle Foundation Trust) concluded a subscription agreement with DCT Holdings with effect from 2 August 2016 in terms of which it subscribed for the B-BBEE Shares, i.e. ordinary shares in DCT Holdings representing 29,9% of the total issued ordinary share capital in DCT Holdings, for a nominal subscription amount of R211 (two hundred and eleven Rand) ('B-BBEE Subscription').

As the B-BBEE Subscription is not subject to the fulfilment of any conditions precedent, the B-BBEE Subscription is therefore fully effective and Pinnacle Foundation (RF) Proprietary Limited (on behalf of the Pinnacle Foundation Trust) holds an immediate, unencumbered 29,9% ownership in the issued ordinary share capital of the DCT Holdings Group.

Financial effects of the B-BBEE Transaction

Any distributions by the Pinnacle Foundation Trust to its beneficiaries shall be included in the consolidated earnings of Pinnacle for the purposes of calculating basic earnings per share ('EPS') in terms of IAS 33 Earnings Per Share. Other than fees paid to the professional advisors and related transaction costs, there will be no further impact on EPS or HEPS in the consolidated financial statements of Pinnacle arising from the B-BBEE Transaction on the current earnings.

Pinnacle will consolidate the 29,9% ordinary shares indirectly held by the Pinnacle Foundation Trust given that, as the Founder, it has the responsibility to appoint the trustees.

The Preference Share Subscription and Special Distribution will eliminate on the consolidation of Pinnacle as these are inter-group transactions.

Midrand

2 August 2016

Corporate Advisor and Transaction Sponsor: Pallidus Capital Proprietary Limited

Attorneys: VDMA

Attorneys: Tugendhaft Wapnick Banchetti and Partners (TWB)

Tax Advisor: Edward Nathan Sonnenbergs Incorporated (ENS)