Petmin : REVISED PRO FORMA FINANCIAL EFFECTS OF THE OFFER

REVISED PRO FORMA FINANCIAL EFFECTS OF THE OFFER

Thursday, 23 February 2017

Unless otherwise indicated, capitalised words and terms contained in this announcement shall bear the same meanings ascribed thereto in the joint firm intention announcement published by Petmin, Capitalworks and Bidco on SENS on 19 December 2016 ('Announcement').

Shareholders are referred to the Announcement, which included the pro forma financial effects of the Offer on an Offer Participant who receives the Share Consideration ('Pro forma Financial Effects'). The Pro forma Financial Effects were based on the reviewed condensed consolidated preliminary financial results of Petmin for the year ended 30 June 2016.

On 23 February 2017, Petmin published its reviewed condensed consolidated interim financial statements for the six months ended 31 December 2016 ('Interim Results'), on SENS. Accordingly, in terms of paragraphs 8.25(c) and 8.28(a) of the Listings Requirements, the Pro forma Financial Effects have been updated with the Interim Results, as well as, a revised estimate of the once-off transaction costs attributable to the Offer ('Revised Pro forma Financial Effects'). The Revised Pro forma Financial Effects are set out below.

The Revised Pro forma Financial Effects have been prepared for illustrative purposes only in order to provide information on how the Offer may affect the financial performance and position of Petmin and an Offer Participant who receives the Share Consideration, by illustrating the effect thereof on the basic and diluted earnings per share ('EPS'), basic and diluted headline earnings per share ('HEPS'), net asset value ('NAV') and tangible net asset value ('TNAV') of an Offer Share that an Offer Participant will be exchanging for the EPS, HEPS, NAV and TNAV per Bidco Linked Share, comprising 1 Bidco Ord and 1 Bidco Pref.

The Revised Pro forma Financial Effects have been prepared to illustrate the effect of the Offer on Petmin and an Offer Participant who receives the Share Consideration, had the Offer been implemented on 1 July 2016 for purposes of EPS and HEPS and on 31 December 2016 for purposes of NAV and TNAV.

The Revised Pro forma Financial Effects set out below are the responsibility of the directors of Petmin and Bidco.

The Revised Pro forma Financial Effects set out below are provided for illustrative purposes only and, because of their nature, may not fairly represent the financial performance and position of Petmin and an Offer Participant after the implementation of the Offer. The Revised Pro forma Financial Effects have been prepared in accordance with International Financial Reporting Standards ('IFRS').

The following assumptions have been made for purposes of presenting the Revised Pro forma Financial Effects:

• Bidco acquires all Offer Shares from Eligible Shareholders.
• Offer Participants elect to receive the Share Consideration in respect of 25% of the total Offer Shares, resulting in the issue of 132.65 million Bidco Linked Shares to Offer Participants.
• Offer Participants elect to receive the Cash Consideration in respect of 75% of the total Offer Shares, resulting in a total Cash Consideration payable of R617 million to Offer Participants.
• For purposes of capitalising Bidco in order to enable the settlement of the Cash Consideration of R617 million by Bidco, Capitalworks will provide a Loan of R150 million to Bidco and, through the Capitalworks Subscription, Capitalworks will subscribe for 291.78 million Bidco Linked Shares. The Loan is repayable in 12 months and shall accrue interest at the Prime Rate.
• Bidco will issue 14.67 million Bidco B Ords to Petmin Management in terms of the Petmin Management Share Issue.
• Estimated once-off transaction costs attributable to the Offer, amounting to R34.38 million, are expensed, of which R3.31 million is payable by Petmin and R31.07 million is payable by Bidco. Capitalworks will provide a loan to fund the transaction costs payable by Bidco. The loan is repayable in 2 years and shall accrue interest at the Prime Rate.
  
• Bidco will be treated as an investment entity in terms of IFRS 10: Consolidated Financial Statements and accounts for its investment in Petmin at fair value through profit or loss. The fair value of the investment is considered to be the consideration paid by Bidco for the Offer Shares.
• Bidco Prefs are classified as a debt instrument.
• There are no post balance sheet events which require adjustment.
• All adjustments, with the exception of the once-off transaction costs attributable to the Offer, are expected to have a continuing effect.

Notes:

1. The financial information in the 'Before the Offer' column has been derived from the Interim Results.
2. The 'Adjusted before the Offer' column has been derived from the Interim Results and adjusted for estimated once-off transaction costs attributable to the Offer, which are payable by Petmin. Total cumulative once-off costs payable by Petmin amount to R3.31 million, of which R0.57 million has already been expensed in the Interim Results.
3. The financial information included in the 'After the Offer' column has been derived by taking the Bidco pro forma financial effects pursuant to the Offer (based on Bidco's audited financial statements as at incorporation, adjusted for the Offer) and multiplying these results by the exchange ratio of 1 Bidco Linked Share for every 1 Offer Share, to provide the pro forma financial effects of the Offer on an Offer Participant who receives the Share Consideration. The individual components of the Bidco Linked Share, being the Bidco Ord and the Bidco Pref, have been presented separately and then aggregated.
4. 3.1.The financial information included in the 'Bidco Ord' column has been derived by utilising the number and weighted average number of Bidco Ords in issue, inclusive of the Bidco B Ords.
5. 3.2.The financial information included in the 'Bidco Pref' column is not presented in terms of IFRS and has been presented for illustrative purposes only and to provide Shareholders with additional information. The EPS and HEPS have been calculated by dividing the finance charge accrual on the Bidco Prefs by the weighted average number of Bidco Prefs in issue. The NAV and TNAV reflect the issue price of the Bidco Pref.
6. 3.3.The financial information included in the 'Bidco Linked Share' column is not presented in terms of IFRS and has been presented for illustrative purposes only and to provide Shareholders with additional information. This column represents the aggregate of the 'Bidco Ord' and 'Bidco Pref' columns. The number and weighted average number of shares in issue represents the Bidco Linked Shares only, excluding the Bidco B Ords.
7. The 'Percentage change' column compares the 'Bidco Linked Share' column included in the 'After the Offer' column with the 'Before the Offer' column.
8. For the avoidance of doubt, the 'Before the Offer' column illustrates a direct interest in Petmin, which represents consolidated operating results of Petmin and its subsidiaries, whereas the 'After the Offer' column illustrates an indirect interest in Petmin through Bidco, an investment entity that accounts for its investment in Petmin at fair value through profit or loss i.e. the operating results of Petmin and its subsidiaries are not reflected in the financial results of Bidco.
   The Revised Pro forma Financial Effects have not been reviewed or reported on by the reporting accountants and auditors of Petmin.
   Johannesburg
   23 February 2017

   Corporate advisor to Capitalworks and Bidco
   One Capital Advisory (Proprietary) Limited

   Attorneys to Capitalworks and Bidco
   Cliffe Dekker Hofmeyr Inc.

   Attorneys to Petmin
   Cliffe Dekker Hofmeyr Inc.

   Sponsor and corporate advisor to Petmin
   River Group

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