Vesta Technology Holdings Limited
(Incorporated in the Republic of South Africa)
(Registration number: 1998/015580/06)
("the company")
Share code: VST
ISIN code: ZAE000016267
Withdrawal of cautionary announcement
1. Introduction
Shareholders are referred to the announcement published in the press on
29 January 2002 wherein it was stated that the provisional results for the
year ending 31 August 2001, which was published on 30 November 2001 ("the
provisional results"), were expected to be materially affected mainly as a
result of the cancellation, by mutual consent, of the agreement in terms of
which Vesta acquired 100% of the shareholding in the Fund Mator Group ("the
agreement"). The cancellation of the agreement has been finalised and
shareholders are accordingly advised of the effects of the cancellation of
the agreement.
2. The agreement
2.1 Background
A circular providing details of the agreement was posted to shareholders,
for information purposes only, on 30 April 2001. The provisional results
incorporated the results and the financial position (assets and liabilities)
of the Fund Mator Group on the basis that the acquisition was completed.
2.2 Reasons for cancellation
The Fund Mator Group's principal income was from African countries other
than South Africa. The intention was to grow the financial software product
of the Fund Mator Group to a position where it could be utilised locally, in
Europe and in the United States of America. Due to the difficulty in
recovering cash generated by the Fund Mator Group from Zimbabwe, Vesta had
to undertake the financing of the product development. Vesta's cash flow
projections were originally made inclusive of the profits from sales to
African countries and without these cash flows, the growth of the products
was hampered and pressure was put on Vesta's own financial resources. Vesta
had to decide between the loss associated with cancellation and the future
financing requirements of the Fund Mator Group with its timeframe to get the
product to maturity. The latter, especially with current market conditions,
was too high risk and consensus was reached by both parties to cancel the
original acquisition agreement.
3. Financial effects of the cancellation of the agreement
The cancellation of the agreement resulted in a loss of R 4 185 386. This
loss has been included in the annual financial statements for the year ended
31 August 2001 ("final results"), which will be posted to shareholders today
and additionally a condensed version is published in the press today. The
effects on earnings per share, headline earnings per share and net asset
value per share are as follows:
Provisional Final Percentage
results results movement
(%)
Earnings/(loss) per share (11.5) (19.9) (73)
(cents)
Headline earnings/(loss) 2.2 (0.4) (109)
per share (cents)
Net asset value per share 32.6 24.0 (26)
(cents)
4. Future growth
Although the impact of this cancellation is material on Vesta's assets and
revenue, it did improve the group's overall liquidity status. Vesta is now
in a position where dedicated attention can be given to its core business
areas to improve revenues and cut down on expenditure.
5. Withdrawal of cautionary announcement
Shareholders are advised that as the cancellation of the agreement has been
finalised and the final results have been published, caution is no longer
required by shareholders when dealing in their shares.
28 February 2002
Midrand
Sponsor
ENF Sponsors (Proprietary) Limited
(Registration number 2000/027636/07)
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