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L.A. Group Limited - Acquisition of a property from a related party L.A. GROUP LIMITED (Incorporated in the Republic of South Africa) (Registration number 1936/008786/06) Share Code: LAR ISIN: ZAE000028676 Share Code: LAN ISIN: ZAE000028684 (`L.A.Group` or `the company`) Acquisition of a property from a related party Introduction Shareholders are advised that the board of directors of L.A. Group have resolved to enter into an agreement in terms of which Biotrace Trading 135 (Proprietary) Limited (`Biotrace`), a wholly-owned subsidiary of L.A. Group will enter into an agreement to acquire the property known as Skye House (`the acquisition agreement`). Skye Footwear (Proprietary) Limited (`Skye Footwear`), a wholly owned subsidiary of L.A. Group in which its branded footwear distribution division is housed, currently leases the property from Look Alive Property Investment (Proprietary) Limited (`Look Alive`). 1. The property The property known as Skye House: - 1.1 is situated on Erf 105, Stormill Extension 3, City of Johannesburg Municipality, measuring 7 487 m2 in total; 1.2 is located at 1288 Reduktor Avenue, Roodepoort; and 1.3 has a double storey office block, a lofty single storey modern warehouse and an adjoining treble storey ablution, canteen and storeroom building of a total lettable area of 3 506mSquared. Skye Footwear is the only tenant and occupies the entire building in terms of a lease agreement with Look Alive. 2. Rationale for the acquisition The group has occupied Skye House since 1984. The group has also acquired two other buildings in the immediate vicinity of Skye House in relation to which Skye House acts as the information technology and telecommunications hub and nerve centre of the group in the area. It is therefore strategically important for the group to acquire Skye House. The acquisition is in line with the ongoing strategy of the group to acquire the premises from which it conducts its business. The rental payable in terms of the lease agreement relating to the property is due to escalate and having regard to current and forecast interest rates the company considers it prudent to acquire the property at this time. The resultant savings of the company is estimated at approximately R600 000 per annum. 3. Particulars of the acquisition Terms of the acquisition 3.1.1 Subject to the fulfilment of the conditions precedent detailed in paragraph 3.2 below, Biotrace will, with effect from the date of transfer of the property into its name, acquire the property from Look Alive in terms of the acquisition agreement for a purchase consideration of R7 750 000 which is to be settled as follows:- 3.1.1.1 payment of a cash deposit of R1 150 000; and 3.1.1.2 the balance of R6 600 000 on transfer as follows: 3.1.1.2.1 R5 500 000 by means of a mortgage bond to be registered over the property; 3.1.1.2.2 R1 100 000 by means of the application of the cash resources of the group. 3.2 Condition precedent to the acquisition As the acquisition constitutes a related party transaction in terms of the JSE Listings Requirements it must be approved by L.A. Group shareholders in general meeting. 3.3 Financial effects of the acquisition The financial effects of the acquisition on earnings per share, headline earnings per share and net asset value per share is less than 3% and is therefore not regarded as significant in terms of the Listings Requirements of the JSE. 3.4 Related party The vendor of the property, Look Alive, is controlled by Mr AK Peer, the chairman of L.A. Group. Accordingly, in terms of the Listings Requirements of the JSE, the acquisition agreement constitutes a related party transaction. Mr Peer and his associates will therefore not be allowed to vote on resolutions regarding the acquisition agreement and the transaction proposed at the general meeting. 3.5 Independent experts` opinion As the acquisition constitutes a related party transaction in terms of the JSE Listings Requirements an independent opinion thereon by an appropriate independent expert is required by the JSE. Sasfin Corporate Finance has been appointed as the independent expert and has concluded that the terms of the acquisition agreement are not fair but are reasonable to shareholders. Full details of the opinion will be included in the circular to shareholders referred to in 4 below. 3.6 Directors` opinion The directors of the company have considered the terms and conditions of the acquisition agreement and are of the opinion that they are beneficial to the company and shareholders and unanimously recommend that shareholders vote in favour of the resolutions to implement the acquisition at the general meeting. The directors, other than AK Peer, intend to vote in favour of the resolutions necessary to implement the acquisition in respect of the shares beneficially owned by them or under their control. 4. Documentation A circular containing full details of the acquisition, the fair and reasonable opinion and a notice convening a general meeting of L.A. Group shareholders will be posted to L.A. Group shareholders in due course. Cape Town 19 August 2004 Sponsor Sasfin Corporate Finance A division of Sasfin Bank Limited Date: 19/08/2004 01:00:05 PM Produced by the JSE SENS Department
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