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31 August 2001
Vesta Technology Holdings Limited
(Registration number: 1998/015580/06)
(Share code: VST)
(ISIN code: ZAE000016267)
ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 AUGUST 2001
Condensed income statement
Audited Audited
Year Year
ended ended
31/8/01 31/8/00
R'000 R'000
Revenue 31 522 65 542
Cost of sales (9 000) (40 835)
Gross profit 22 522 24 707
Other operating income 249 826
Other operating expenses (22 452) (15 860)
Results from operating activities 319 9 673
Loans written off (3 537)
Loss from discontinued operation (9 645)
Loss from cancellation of contract (4 185)
Net interest received/(paid) (116) 578
Profit/(loss) before taxation (17 164) 10 251
Income tax expense 361 277
Net profit/(loss) for the year (16 803) 10 528
Earnings attributable to shareholders 10 528 (16 803)
Reconcilliation of earnings and headline
earnings
Goodwill amortised 1 747 1 058
FundMator operating profits consolidated (2 652)
Loss on cancellation of contract 4 185
Loss from discontinued operation 9 645
Loan written off 3 537
Headline earnings/ (loss) (341) 11 586
Earnings/(loss) per share (cents) (19,9) 12,4
Headline earnings/(loss) per share (cents) (0,4) 13,7
Weighted average number of shares 84 600 84 817
(million)
Condensed statement of changes of equity
for the year ended 31 August 2001
Share Share Other Accumu- Total
capital premium reserve lated
s profit
R'000 R'000 R'000 R'000
R'000
Balance at 1 September 82 15 131 7 135 22 348
1999
Net profit for the year 10 529 10 529
Foreign translation 77 77
reserve
Issue of share capital 3 4 250 4 253
Balance at 31 August 85 19 381 77 17 664 37 207
2000
Net profit/(loss) for (16 803) (16 803)
the year
Foreign translation 340 340
reserve
Post acquisition 112 (112)
profits
Shares not issued (423) (423)
Balance at 31 August 85 18 958 529 749 20 321
2001
Condensed balance sheet
Audited Audited
Year Year
ended Ended
31/8/01 31/8/00
R'000 R'000
Assets
Non-current assets 20 208 25 415
Tangible assets 6 351 4 512
Non-tangible assets 12 959 20 430
Deferred tax 835
Other financial assets 63 473
Current assets 8 279 23 040
Inventories 110 10 999
Trade and other receivables 7 502 6 962
Cash and cash equivalents 433 4 656
Other financial assets 234 423
Total assets 28 487 48 455
Equity and liabilities
Capital and reserves 20 321 37 207
Equity capital 19 043 19 466
Non-distributable reserves 529 77
Accumulated profits 749 17 664
Non-current liabilities 374 303
Interest bearing borrowings 158 298
Other financial liability 216
Deferred taxation 5
Current liabilities 7 792 10 945
Trade and other payables 4 681 9 688
Short term borrowings 3 111 538
Taxation 719
Total equity and liabilities 28 487 48 455
Condensed cash flow statement
Cash flows from operating activities (4 723) 5 316
Cash utilised by investment activities (2 033) (10 854)
Cash effects of financing activities 164 89
Net change in cash and cash equivalents (6 592) (5 449)
Cash and cash equivalents acquired (269) 932
Cash and cash equivalents at beginning of 4 323 8 840
year
Cash and cash equivalents at end of year (2 538) 4 323
Commentary
The Business
Vesta's core business competency is the delivery of total information
technology services. Vesta delivers these skills to the marketplace in four
main areas: software development, services and support, training and own-
developed product.
Review of results
The financial statements have been prepared in accordance with South African
Statements of Generally Accepted Accounting Practice (GAAP).
The reporting period was a challenging one and developments during the year
under review had a marked effect on Vesta and its operations. The cost of
our growth decisions impacted the core operations and added to its running
costs without increasing its revenue. The result was that growth in the core
operations could not be realised.
In the course of the year the decision was made to discontinue the
operations of Vesta Software Solutions (uk) as the company could no longer
operate in the absence of a viable market for its product. This resulted in
a loss on discontinued operations of R9, 645 million. The revenue of the
prior year included revenue from VSS (uk) of R 33,6 million. The
discontinued operations did not contribute any revenue in the current year.
Another tough decision was to cancel the agreement between Vesta and the
FundMator Group. Market changes and the related pressures in Africa
contributed to this decision as some of Vesta's capital was tied up in the
FundMator Group's operations. Other contributing factors were that the
profits realised did not match the expected returns for both parties, while
for the FundMator group to realise their expected return, they would need
extensive funding which Vesta cannot provide at present. After evaluating
the different options the board decided that these markets were not our
primary targets and that the risk associated with them outweighed the
benefit. We believe that a better return can be generated by focusing on our
core business. The loss on the cancellation of the agreement amounted to R4
185 million.
Future
Although the impact of this cancellation was material to Vesta's assets and
revenue, it did improve the group's overall liquidity status. This must be
seen in light of the provisional results released in November 2001, which
did not reflect the cancellation of the FundMator Group contract. By
regrouping, Vesta is in a position where dedicated attention can be given to
its core business areas.
By order of the Board
Frederick Morrison Johannesburg
Group Chief Executive 27 February 2002
Directors: F Morrison, M Morrison* (*Non-executive).
Transfer Secretaries: Computershare Services, Edura House, 41 Fox Street,
Johannesburg 2001.
Registered Office: Vesta House, Gazelle Close, Corporate Park, Old Pretoria
Rd, Midrand, Johannesburg. Tel: (011) 314-8181 Fax: (011) 314-8182
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