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Argent - Acquisition By Argent Of The Entire Issued Share Capital Of Xpanda And
Trading Update
ARGENT INDUSTRIAL LIMITED
(Registration number 1993/002054/06)
Share code: ART ISIN: ZAE000019188
("Argent")
ACQUISITION BY ARGENT OF THE ENTIRE ISSUED SHARE CAPITAL OF XPANDA SECURITY
(PROPRIETARY) LIMITED ("XPANDA") ("THE ACQUISITION") AND TRADING UPDATE
1. INTRODUCTION
Further to the cautionary announcement published on 31 January 2005, the
directors of Argent are pleased to announce that Argent has concluded an
agreement to acquire the entire issued share capital of Xpanda.
2. NATURE OF BUSINESS OF XPANDA
Xpanda is one of the leading manufacturers of steel barrier security in South
Africa. The main products manufactured by Xpanda include security doors,
driveway security gates and burglar bars. In addition, Xpanda offers advice on
security issues and a valuable after-sales and back-up service to its customers.
There are approximately 55 local distributors of the Xpanda range of products in
South Africa. The company also exports products.
The activities of Xpanda can be broadly categorised into four segments:
Do-It-Yourself:
This segment involves standard ready made security products that are made in
bulk and sold in chain stores such as Builders Warehouse, Dions, Mica Hardware
etc. The products include ready-to-fit burglar bars, security gates and trellis
expander gates.
Shutters
This segment involves the supply of large shutter/roller doors which are custom
made and installed for security purposes at business premises, retail stores,
factories and fire stations.
(iii) Contracting
This segment involves sales of bulk security products to contractors i.e..
property development contractors for the installation of security gates and
burglar bars in townhouse complexes.
(iv) Exports
This segment deals with the exporting of certain of the above security products
to countries such as Australia, the United Kingdom, Holland, France, Italy,
Portugal, Canada, New Zealand, Mauritius, the Seychelles, Ghana, Nigeria and
Uganda.
For more information on the activities of Xpanda, please see www.xpanda.co.za.
3. RATIONALE FOR THE ACQUISITION
Argent"s long term strategy is to build a portfolio of branded steel product
companies. To this end, Argent has acquired other branded steel product
companies such as Jetmaster and Excalibur. This acquisition will further this
strategy.
The Argent Group can benefit from the existing marketing channels that have been
established by Xpanda in areas where the Argent Group currently has no presence,
and Xpanda can benefit from Argent"s international distribution capability.
The acquisition will provide Xpanda with strong ownership and a holding company
that has the financial ability to invest capital in expanding and developing
Xpanda"s business further, as well as a good track record of being able to grow
its core businesses.
4. TERMS OF THE ACQUISITION
The effective date of the transaction is 1 April 2005. The purchase
consideration is approximately R49,3 million, which will be settled by the
allotment of 5 135 084 renounceable ordinary Argent shares of 5 cents each and
issued at 960 cents per share to the vendors of Xpanda being RJ Southey
Investments (Proprietary) Limited, B & C Taylor Family Trust, Craig Basil
Osborne, Michael John Moses and Ghislaine Riceman ("the vendors").
Application will accordingly be made, subject to certain suspensive conditions
precedent, set out in paragraph 6 below, to the JSE Securities Exchange South
Africa ("JSE"), to issue a further 5 135 084 Argent ordinary shares of 5 cents
each.
5. FINANCIAL EFFECTS OF THE TRANSACTION
The table below sets out the pro forma financial effects of the acquisition on
an Argent share, for illustrative purposes, based on Argent"s interim financial
statements for the 6 months ended 30 September 2004, and Xpanda"s interim
financial statements for the 6 months ended 31 December 2004:
Before After Percentage
acquisition acquisition change
EPS (cents) 61,1 63,8 4,4
HEPS (cents) 62,0 65,0 4,8
NAV per share 448,2 484,6 8,1
(cents)
NTAV per share 403,4 406,9 0,9
(cents)
Notes:
The information in the "before" column has been extracted from the interim
financial information of Argent as at 30 September 2004.
The effect on earnings per share ("EPS") and headline earnings per share
("HEPS") has been calculated on the assumption that the acquisition was
effective for 6 months with effect from 1 April 2004.
The effect on net asset value per share ("NAV") has been calculated on the
assumption that the acquisition was effective on 30 September 2004.
Net tangible asset value per share ("NTAV") after the acquisition is based on
the gross purchase consideration for Xpanda of R49,3 million and its net
tangible asset value of R23,3 million at 31 December 2004.
6. SUSPENSIVE CONDITIONS
The acquisition is subject to the fulfillment of the necessary regulatory
approval being received from the JSE, and approval from the Competition
Commission.
7. WITHDRAWAL OF CAUTIONARY
Shareholders are referred to the cautionary announcement dated 31 January 2005,
and are advised that as a result of this announcement the cautionary is now
withdrawn.
8. DOCUMENTATION
The acquisition constitutes approximately 7.6% of Argent"s current issued share
capital, and is categorised as a Category 3 transaction by the JSE. Thus, this
announcement appears for information purposes only. The transaction is at arms
length and does not require shareholder approval or a circular to be sent to
shareholders. Shareholders will be informed via SENS on the Competition
Commission"s approval on the transaction, which is expected to be received
within 6 weeks of this announcement.
9. TRADING UPDATE
In terms of the Listings Requirements of the JSE Securities Exchange South
Africa, companies are required to publish a trading statement as soon as they
become reasonably certain that the financial results for the period to be
reported on will be more than 20% different from that of the previous
corresponding period. Accordingly, a review of the financial results for the 12
months ended 31 March 2005 by management has indicated that headline earnings
per share of Argent will be 20% to 30% higher than that of the prior comparative
period.
The financial information on which this trading statement is based has not been
reviewed or reported on by Argent"s auditors. The results for the 12 months
ended 31 March 2005 are expected to be published on or about 8 June 2005.
Roodepoort
25 February 2005
Sponsor
LPC MANHATTAN
LPC Manhattan Sponsors (Pty) Limited
Registration number 1999/012479/07
Date: 25/02/2005 05:52:04 PM Supplied by www.sharenet.co.za
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