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Fashion Africa Limited (Incorporated in the Republic of South Africa)
(Reg No 1944/017149/06) ("Fashaf")
(ISIN Code ZAE000016473) (Alpha Code FSH)
Vestacor Limited
(Incorporated in the Republic of South Africa)
(Reg No 1996/017285/06) ("Vestacor")
(ISIN Code ZAE000018412) (Alpha Code VTR)
ANNOUNCEMENT TO SHAREHOLDERS OF FASHAF AND VESTACOR REGARDING THE
ACQUISITION BY FASHAF OF A PORTION OF THE BUSINESS OF SPORTSHOE WORLD, A
DIVISION OF MORESPORT (PTY) LIMITED
Vestacor Corporate Finance is authorised to announce that an agreement has
been entered into, subject to the fulfillment of certain conditions set out
below, between Moresport (Pty) Limited (a wholly owned subsidiary of
Vestacor) and Fashaf, in terms of which Fashaf will acquire a portion of the
business of Sportshoe World for a purchase consideration of R17.702 million
("The Acquisition" or "The Transaction")
Businesses subject to the Transaction
Fashaf will acquire as a going concern the fixed assets, stock and lay-bye
debtors, which relate to 33 Sportshoe World stores. These stores are
situated primarily in CBD areas of cities and towns throughout South Africa.
Rationale for the Transaction
The Acquisition will result in the following benefits:
- Fashaf gains a store base of the correct size and location
that fits its profile;
- Fashaf understands retailing to the mass market and has
the necessary skills and brand reputation to extend its
offering to these customers;
- Large economies of scale within Fashaf which will serve a leaner cost
structure resulting in higher margins; and
- Opportunity for the elimination of duplicated functions and real cost
savings through leveraging of the existing strong Fashaf centralised
infrastructure.
The Purchase Price
The purchase consideration is R17.702 million. The price is based on a net
asset value of R13.654 million and a goodwill element of R4.048 million.
The amount is to be settled by the issue of 442 550 000 Fashaf shares. The
number of shares was calculated with reference to the par value of a Fashaf
share, being 4 cents per share.
Financial Effects
The following table illustrates the earnings and net asset
value attributable to a Fashaf shareholder before and after
the implementation of the Transaction, based on:
- The audited Financial statements of Fashaf for the
8 months ended 28 February 2001; and
- Operating profit of the 33 Sportshoe World stores for
the 8 months ended 28 February 2001.
All financial effects are expressed in cents per share unless otherwise
indicated.
Per ordinary share Before the After the % Change
transaction transaction
Loss per share (17.9) (6.5) 63.7
Headline loss per share (17.2) (6.2) 63.9
Tangible net asset
value per share (0.2) 1.0 600.0
Intangible net asset
value per share - 0.3 100.0
Weighted number of
shares ('000's) 251 690 694 240 -
Effects on Vestacor Shareholders
Given the fact that Vestacor prepares its financial statements in terms of
AC 133 and that there is no realised or unrealised gain resulting from the
Transaction, there is
no impact on Vestacor's earnings, headline earnings or net asset value.
Conditions Precedent
The Transaction is subject to:
- The approval of Fashaf shareholders in general meeting. Vestacor, given
that it is a related party in terms of the JSE Securities Exchange rules
("JSE") to the transaction, will not be permitted to vote on the
Acquisition;
- Shareholder approval to increase the authorised share capital of Fashaf;
- An independent, fair and reasonable to Fashaf shareholders as the
Transaction
is a related party transaction; and
- JSE Securities Exchange SA approval.
Circular to Shareholders
A circular setting out the Transaction and giving notice to the Fashaf
shareholders
of a general meeting to approve the Transaction will be sent to Fashaf
shareholders within 28 days of this announcement or such later period as the
JSE may allow.
Johannesburg
14 September 200
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